Heavy nat cat losses do little to dent reinsurers' resilience

Analysis of financial results from 2018 suggests the world's largest reinsurers remain resilient in the face of two years of considerable losses due to natural catastrophes. The Aon’s Reinsurance Aggregate (ARA) report, which analyses the results of 23 major reinsurers representing about half of global non-life reinsurance premiums and a large majority of the life reinsurance premiums, cited total capital deployed as U$233bn as at 31 December 2018, a reduction of U$13bn, or 5%, relative to the prior year.

Operating performance improved in 2018, aided by a reduced, though still high, burden of natural catastrophe losses. However, the investment result was materially weaker than in 2017 and, as a result, earnings remained well below the cost of capital.

Gross P/C premiums written rose by 11% to US$194bn, split primary insurance U$108bn (up 9%) and assumed reinsurance U$86bn (up 13%).

A P/C underwriting profit of U$1.3bn, meanwhile, was a significant improvement on the loss of U$9.3bn reported in 2017, aided by approximate halving of natural catastrophe losses to U$11.3bn.

Head of business intelligence for Aon’s Reinsurance Solutions business, Mike Van Slooten said: “The natural catastrophe losses absorbed by the private market in 2017 and 2018 are estimated at U$220bn – an unprecedented total for any two-year period. The impact to the ARA exceeded U$32bn and yet overall earnings have remained positive in both years. We believe this is testament to the resilience of the sector.”

The 23 reinsurers are Alleghany, Arch, Argo, Aspen, AXIS, Beazley, Everest Re, Fairfax, Hannover Re, Hiscox, Lancashire, Mapfre, Markel, Munich Re, Partner Re, QBE, Qatar Insurance, RenRe, SCOR, Sirius, Swiss Re, Third Point Re and W R Berkley.

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