Reinsurers lose capital, increase premiums in 2011

Substantial catastrophe losses led to a 3% reduction in total global reinsurer capital last year, according to a report from Aon Benfield.

The Aon Benfield Aggregate analysis, which examines results from the world’s top 28 reinsurers, notes that reinsurer capital was $455 billion at the end of 2011, down from $470 billion a year earlier.

However, gross written premiums for reinsurance companies increased by 11.4% in 2011. Significant catastrophe activity and the associated reinstatement premiums increased the total to $136 billion.

The group’s combined ratio dropped by 13.5 points to 108.2%.

“The reinsurance sector remains strong after a testing year in 2011 and continues to provide very efficient underwriting capital to insurers,” said Mike Van Slooten, head of Aon Benfield’s international market analysis team. “The volatility sustained by reinsurers was substantial and materially improved the earnings and capital reported by insurers affected by unusual frequency and severity of events occurring in 2011. The value proposition of reinsurance has rarely been so clearly demonstrated.”