Global reinsurance capital hit an estimated $570 billion in the first six months of 2014, a new record as the money sources for the sector continued to flourish.
Aon Benfield noted the milestone as part of the latest edition of its Aon Benfield Aggregate report, which looks at the financial numbers for the top reinsurers every six months.
According to the report, the $570 billion in capital is a 6 percent jump compared to levels reached as of Dec. 31, 2013. The figure reflects capital insurers can use to trade risk with and entails both traditional and non-traditional forms of reinsurance capital, Aon Benfield said.
“The influx of alternative capital is lowering risk transfer costs for both insurers and reinsurers, creating a win-win situation that should drive market expansion in the medium-term,” Mike Van Slooten, head of Aon Benfield’s International Market Analysis Team, said in a statement. “We are closely monitoring developments in what is a very dynamic environment.”
Aon Benfield Analytics looked at capital levels reported by the 31 top global reinsurers, including 29 publicly listed holding companies, for its twice-yearly report. Two are U.S. domiciled subsidiaries of Warren Buffett’s Berkshire Hathway – National Indemnity Company (NICO) and General Reinsurance Corp. (Gen Re).
Aon Benfield’s study found that capital reported by the 31 companies it followed jumped in the first six months of 2014 to $351 billion, a 4 percent increase reflecting 62 percent of global reinsurer capital. This was driven primarily by $18.6 billion in collective net income and $9.4 billion of unrealized capital gains, offset mostly by $14.3 billion of dividends and share buybacks, Aon Benfield said.
The report also determined that gross property/casualty premiums rose 4 percent during the first half of 2014 to $109 billion, and that growth was split equally between insurance and reinsurance business. Also, the combined ratio hit 90.3, a 0.4 percent uptick. In dollar terms, P/C underwriting profit stayed at just under $8 billion.
Also of note: catastrophe losses dipped versus the same period last year, and were also a healthy level below the long-term average.
As well, the companies reported a 12.2 percent return on equity in the first half of 2014, a number that hit heights not seen since 2009.
Aon Benfield, a division of Aon plc, is a reinsurance intermediary and full-service capital advisor.
Source: Aon Benfield