Global reinsurer capital has risen to $575 billion according to the latest Aon Benfield study.
The study has estimated that global reinsurer capital rose by 6 percent in 2014, including a 28 percent increase in alternative capital to $64 billion.
Capital reported by the 31 reinsurers surveyed rose by 2 percent to $346 billion, though the net income of $38.5 billion was offset by dividends and share buybacks of $22.3 billion.
Gross property and casualty premiums also rose by 2 percent to $198 billion, with reinsurance volume unchanged at $89 billion, despite the industry’s pricing pressure.
Over the course of the year 2014, net catastrophe losses declined from 5.6 percent to 3.8 percent of net premium earned and were “well below” the long-term average, according to Aon Benfield.
Mike Van Slooten, head of Aon Benfield’s international market analysis team, said: “Sector consolidation is underway as companies look to achieve the advantages of scale and diversification, one of the drivers being enhanced access to alternative capital.”
“Three recently announced M&A transactions between [the companies surveyed] will reduce the number of entities in the study going forward.”
The survey showed that reinsurers are now incorporating material alternative capital (through insurance-linked securities, sidecars and asset management mandates) to lower their cost of underwriting capital.
