2011 Q1 cat losses an “earnings event,” not a capital event: Aon Benfield

Catastrophe losses from 2011 Q1 will likely eat into reinsurers’ earnings rather than their capital, according to Aon Benfield.
Reinsurers grouped under the Aon Benfield Aggregate (ABA), a subset of Global Reinsurer Capital, have a combined loss estimate of $12.4 billion in 2011 Q1, with some companies still to comment on the extent of their exposures, Aon reported in its Aon Benfield Aggregate 2010 Report.
“Aon Benfield believes the losses to date fall within expected annual income and represent an earnings event rather than a capital event for the reinsurance industry,” the report says.
Of the reinsurers in Aon Benfield’s aggregate, Flagstone Re reported the largest percentage of 2010 shareholders’ funds to be affected by catastrophe losses (20.9%). Montpelier followed with 13.3% of 2010 shareholder funds being affected by catastrophe losses and Platinum reported 13%.
At year-end 2010, the companies comprising Aon Benfield’s aggregate reported shareholder’s funds totalling $248 billion, representing a growth of 18% from year-end 2009. The main contributors to growth were $23.8 billion of net income and $10 billion of unrealized investment gains, the report says.
The combined ratio rose by 5.7% points to 95.3% in 2010, driven by disclosed catastrophe losses equivalent to 9.1% of net premium earned. Prior year reserve releases provided 5.0% points of benefit.