Due to ongoing market pressures there was a reduction in the aggregate net income for HY 2017 to USD 8.3 billion from USD 14.5 billion at HY 2016. This resulted in an increase in combined ratios for the Index to 95%, up from 94.1% in HY 2016, and a reduction in investment yields to 2.8% from 3.1%. A significant reduction in both natural and man-made catastrophe losses, along with continued substantial support from reserve releases were not sufficient to offset the increase in the reported combined ratios.
The aggregate Return of Equity (RoE) for the Index reduced to 4.6% from 8.3% at HY 2016, largely due to the accounting of a significant adverse development cover written by National Indemnity. Excluding National Indemnity, on a like for like basis the remaining Index constituents returned an aggregate RoE of 7.8% (HY 2016: 8.7%).
For the Subset** of companies within the Index the ROEs, adjusted for prior year reserve releases and normalised catastrophe losses, showed a further deterioration to 3.7% from 4.5% in HY 2016.
John Cavanagh, Global CEO of Willis Re, said: “Ongoing market pressures are undoubtedly manifesting themselves in a diminishing underlying return on equity and further impacting reduced net incomes. This deterioration is further weakening the global reinsurance industry’s performance. However, despite these challenging conditions shareholders’ funds have strengthened, maintaining robust balance sheets across the market.”
Download the full report: The Willis Re Reinsurance Market Report Half Year 2017 is a biannual publication providing in-depth analysis of the size and performance of the reinsurance market. Analysis is based on the Willis Reinsurance Index* group of companies. In 2017 the Index* includes 36 companies from across the globe and the Subset** 23 companies.
* Index relates to those companies listed within Appendix 1 of this report.
** Subset is defined as those companies that make the relevant disclosure in relation to cat losses and prior year reserve releases. All constituents of the Subset are publicly listed groups that comprise 56% of the aggregate capital Index
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