11th September 2011

Major reinsurers still have robust capital positions says Aon Benfield

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Aon Benfield has launches the latest edition of its Aon Benfield Aggregate (ABA) report, which analyses the financial position of the world’s 28 leading reinsurers at 30th June, and examines how the year’s major natural catastrophe events have impacted their first half earnings and capital.
Aon Benfield Analytics estimates that total global reinsurer capital reached $445bn. This figure is a broad measure of the combined traditional and non-traditional reinsurance capital available worldwide.
Meanwhile, the group of 28 leading reinsurers that comprise the ABA reported capital totaling $242.4bn–a decline of 1.7% since the end of 2010. The main contributors to this change in capital position were $1.2bn of net income, $0.8bn of new capital and $2.4bn of foreign exchange gains, offset by $7.1bn of dividend payments and $2.5bn of share buybacks.
Other key findings within the ABA include:
-The first half combined ratio for the 28 ABA companies rose by 20.9 percentage points to 120.6%, with $18.2bn of catastrophe losses representing 34.1% of net premiums earned. This translated into a property and casualty underwriting loss of $11bn.
-The total investment return reported by the ABA reinsurers fell by 12% to $18.5bn, driven by a much lower level of capital gains.
-The overall net income of $1.2bn reported by the ABA companies for the first half of 2011 represented a return on average common equity of 0.5%. This followed a return of $23.8bn, or 10.4%, for the whole of 2010.
Mike Van Slooten, International head of Aon Benfield Analytics’ International Market Analysis team, said “Despite the elevated level of catastrophe losses over the past 18 months, financial strength ratings have remained broadly unchanged, reflecting continued robust capital positions.”