Total global reinsurer capital, comprising both traditional and alternative markets, stood at $565 billion at the end of 2015, according to Aon Benfield.
The Aon Benfield Aggregate report, which analyses the financial results of 27 reinsurers, revealed that global reinsurer capital had declined 2 percent since 2014.
Within the total figure of $565 billion, traditional reinsurance capital has decreased by 4 percent to $493 billion, driven by the strengthening of the US dollar and the impact of rising interest rates on bond valuations.
However, the influence of alternative capital continued to grow, increasing by 12 percent to $72 billion.
The study, which now covers a decade of data, found that shareholders’ funds fell by 4 percent to $326 billion at the end of 2015.
Mike Van Slooten, co-head of Aon Benfield’s market analysis team, said: “Ten years have now elapsed since the last major land-falling hurricanes in the US. This has been a decade of unprecedented profitability for global reinsurers, as seen in the average combined ratio of 92.5 percent and average return on equity of 11.1 percent reported by the listed ABA companies over this period.”
“The growing pressure on underlying earnings should be viewed against this backdrop, but in reality is likely to drive further M&A activity in the short to medium term.”
