Aon Benfield has estimated that global reinsurer capital totalled $565 billion at the end of June.
Its report, which analysed the financial results of 28 major reinsurers in H1 2015, showed that on an underlying basis, the capital available to support reinsurance underwriting was flat, with retained earnings offsetting unrealised losses on bond portfolios.
Alternative capital continues to grow, but at a slower pace than before, according to the report, which said that the total rose by 6 percent to $68 billion.
The report found that shareholders’ funds reported by the Aon Benfield Aggregate companies fell by 4 percent to $332 billion at 30 June, but the total was slightly higher at constant exchange rates, driven by solid earnings.
Premium growth is being achieved and in original reporting currencies, two-thirds of the ABA constituents achieved growth in property and casualty premiums in H1 2015.
Underwriting performance remains strong, which was aided by low global catastrophe losses and favourable prior year reserve development. The combined ratio stood at 91.1 percent.
The report also found that investment returns are still under downward pressure, with little prospect of relief in the near term. The ordinary yield has declined to 2.8 percent.
Headline return on equity has eroded modestly, but remains resilient at 10.7 percent (annualised).
Sector consolidation continues, as companies look to achieve the advantages of scale and diversification, according to the report.
Mike Van Slooten, head of Aon Benfield’s international market analysis team, commented: “The landscape of the reinsurance industry is changing, driven by market dynamics in the developed world and the rising influence of Asian capital.”
“Discerning reinsurance buyers will continue to benefit in this environment, but the level of complexity is increasing and understanding broader industry trends has never been more important.”
