Canadian Underwriter

Underwriting profitability down 13% for Aon Benfield Aggregate

September 8, 2015   by Canadian Underwriter

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Despite a reduction in catastrophe losses in the first six months of 2015, the combined ratio of the Aon Benfield Aggregate deteriorated by 0.8 points, Aon plc reported Tuesday, though all insurance carriers in that aggregate were profitable.

The Aon Benfield Aggregate (ABA) is comprised of 26 publicly-reporting insurers plus Berkshire Hathaway subsidiaries National Indemnity Company (NICO) and General Reinsurance Corp. Aon reports on the aggregate’s results every six months with the intent of showing trends in the property & casualty reinsurance marketplace.

All ABA firms were profitable in the first half of 2015 on a calendar year basis, Aon reported, though P&C underwriting profitability for the aggregate fell 13% from the same period in 2014, to $6.8 billion. All figures are in United States dollars.

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 Aon plc has released the Aon Benfield Aggregate, in indication of the reinsurance market

“The combined ratio of the listed ABA deteriorated by 0.8 percentage points to 91.1% in the first half of 2015, despite a further reduction in reported catastrophe losses and increased support from the favourable development of prior year reserves,” Aon added. “These positive factors were out-weighed by the effects of weakening pricing and business mix changes on attritional loss and expense ratios.”

Total premiums written by the ABA was $150 billion during the first half of this year, of which $112 billion was P&C. During the same period in 2014, total premiums written were $171 billion, of which $128 billion was in P&C, Aon noted.

“Comparisons with the prior year are impacted by the depreciation of the Euro against the US Dollar and the absence of approximately USD3 billion of premium relating to Catlin, Montpelier and Platinum,” Aon added.

The ABA firms with the greatest year-over-year growth, in premiums for the first six months, was Hannover Re (10%), while NICO fell by 51%, that drop was “related to a 50% intra-group quota share with GEICO,” also a subsidiary of Berkshire Hathaway, Aon noted.

“Lancashire reported a 33% decline, or 11% excluding the effect of multi-year contracts written in the prior period.”

During the first six months, the ABA had an attritional loss ratio of 60.4%, up from 58.8% from the first half of 2014. The expense ratio was 32.4%, up from 21.4% during the first half of last year. Of the combined ratio, 2.7 points were from catastrophe losses, down from 3.7 points in 2014.

The companies with the lowest combined ratios were RenaissanceRe (66.7%) and Lancashire (75.1%) while those with the highest combined ratios were Mapfre (99.1%) and HannoverRe (95.6%).

Ordinary investment income for the ABA fell 10%, from $13.422 billion in the first half of 2014 to $12.1 billion during the six months ending June 30, 2015.

Global reinsurer capital totalled $565 billion as of June 30, 2015, down from $575 billion as of June 30, 2014.