September 8, 2014 by Canadian Underwriter
Aon Benfield released Monday financial data for its aggregate of 31 global reinsurers, reporting the combined ratio was 90.3% in the first half of 2014, up 0.4 points from the first six months of 2013, while gross written premiums were $128 billion, up 17% from the same period in 2013. All figures are in United States dollars.
The Aon Benfield Aggregate (ABA) covers the reported results, for six months, of 31 major reinsurers worldwide. It includes 29 publicly-listed holding companies (which Aon Benfield calls the “listed ABA”) and two subsidiaries of Berkshire Hathaway Inc. – the National Indemnity Company (NICO) of Omaha, Neb. and General Reinsurance Corp. of Stamford, Conn.
Aon Benfield is the reinsurance broking arm of London-based Aon plc.
The cat loss ratio in the first half of 2014, for the listed ABA, was 3.6%, down from 5.4% in the same period in 2014.
Aon Benfield noted in its latest aggregate report that NICO had “entered into a significant intra-group reinsurance transaction with GEICO Group effective January 1, 2014, which has had a material impact on its reported results.” So many of the figures used the listed ABA, in order to “provide a more meaningful picture of the sector’s underlying performance.”
For the listed ABA, the attritional loss ratio was 58.8% (up from 57.6% in the first six months of 2013). The expense ratio was 31.4% and the prior year reserve adjustment was -3./5%.
“Reported catastrophe losses were significantly reduced relative to the prior year period and well below the long-term average,” Aon Benfield stated of the first half of this year. “Underlying trends were negative, as weakening pricing and business mix changes, particularly a shift towards longer-tail proportional contracts, impacted attritional loss and expense ratios. In addition, the support from the favourable development of prior year reserves was reduced, partly influenced by deterioration of the Costa Concordia loss.”
Total premiums written by the ABA rose by 13% year over year, to $171 billion in the first half of 2014, Aon Benfield reported. The portion related to property & casualty rose by 17%, from $108.9 billion in the first half of 2013 to $128 billion in the first half of 2014. Excluding General Re and NICO, p&c premiums rose only 4% year over year, from $104.8 billion in the first six months of 2013, to $109 billion in the first half of this year.
The p&c underwriting profit, for the listed ABA, was $7.9 billion for the first half of 2014, unchanged from the first half of 2013. One-third of that – $2.6 billion – was from Swiss Re, ACE and Munich Re.
Aon Benfield estimated global reinsurer capital at $570 billion as of June 30, 2014, of which $511 billion was in “traditional” capital and $59 billion was in “alternative” capital. At the end of 2013, global reinsurer capital was $540 billion, of which $490 billion was traditional and $50 billion was alternative capital.
“The involvement of capital market investors in the reinsurance sector through non-equity participations continues to expand,” Aon Benfield noted. “This is evidenced by record levels of catastrophe bond issuance in the first half of 2014 (exceeding the prior year period by almost 50%), growth in fully collateralized placements, the establishment of new sidecar vehicles and the exploration of alternative business models by hedge fund managers.”