Canadian Underwriter

Underwriting profits up, cat losses down for Aon Benfield Aggregate of 31 global reinsurers

April 11, 2014   by Canadian Underwriter

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Aon Benfield released Friday the 2013 financial results of its aggregate of 31 reinsurers, reporting a 3.4-point drop in the catastrophe loss ratio and a 46% increase in underwriting profit.

“All (Aon Benfield Aggregate) companies generated underwriting profits on a calendar year basis in 2013, with catastrophe specialists RenaissanceRe and Montpelier Re reporting particularly strong results,” reported Aon Benfield, the reinsurance intermediary and capital advisor division of London-based Aon plc, in the Aon Benfield Aggregate results for year ending Dec. 31, 2013.

All 31 reinsurers in the ABA, except for NICO and General Reinsurance Corporation, are publicly listed.  With its aggregate, Aon Benfield aims to identify trends in the P&C reinsurance marketplace.

The combined ratio for the ABA was 89.6% in 2013, down from 92.4% in 2012. In 2013, the catastrophe loss ratio was 4.7% (down from 8.1% in 2012) while the attritional loss ratio was 59.1% (down from 58.4% in 2012).

In 2011, the ABA had a cat loss ratio of 20.1% and a combined ratio of 105.1%.

“P&C underwriting profit across the ABA companies rose by 46% to USD17.4 billion in 2013, split evenly between the 2013 accident year and favorable development of prior year reserves,” Aon Benfield stated. “The accident year combined ratio improved by 2.1 points to 94.8%, driven by a 38% reduction in disclosed catastrophe losses to USD7.9 billion. Accident year underwriting profit rose by 81% to USD8.7 billion.”

The 31 firms in the ABA had combined total gross written premiums, in P&C, of US$199 billion in 2013. The leaders were Swiss Re with US$20.67 billion, ACE Group with US$18.091 billion, QBE with US$17.975 billion and Munich Re, with €17.013 billion. As of Friday the Euro was worth US$1.39.

Aon Benfield estimated there was US$540 billion in global reinsurer capital as of Dec. 31, 2013, up 7% from US$505 billion as of Dec. 31, 2012. Of that Aon Benfield estimates there was US$490 billion in capital from traditional sources and US$50 billion from alternative sources.

ABA reported the shareholders’ funds of the 31 ABA companies was US$337 billion, representing 62% of global reinsurer capital. That total increased 6% from US$317 billion in 2012.

“Major insurers and reinsurers generally maintained their solid operating performance during 2013, aided by economic recovery in the United States, exposure growth in emerging markets and below average insured catastrophe losses,” according to Aon Benfield. “However, the support to reported capital positions was muted by unrealized losses on bond portfolios, driven by rising interest rates associated with ‘tapering’ of the Federal Reserve’s quantitative easing program.”