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Global reinsurance loss ratio up 7.1 points in first six months of 2016: A.M. Best


September 7, 2016   by Canadian Underwriter


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The loss ratio in the global reinsurance market was two points higher during the first six months of this year than the five-year average, while in 2015, Paris-based SCOR SE overtook Omaha, Neb.-based Berkshire Hathaway in A.M. Best Company Inc.’s ranking of global reinsurers, A.M. Best said in a recent report.

A.M. Best Company released Monday its global reinsurance segment review, which it publishes early each September.

For the global reinsurance market, the loss ratio for the first half of 2016 was 63.3%, up 7.1 points from 56.2% in 2015, and two points higher than the five-year average of 61.3%.

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While US$30 billion “in insured losses globally through the first half of 2016 has tempered the favorable catastrophe loss trend, the reinsured portion of these losses is still well within annual reinsurers’ catastrophe budgets, and as a result, operating performance remains buoyant despite the current severe market pressures,” stated Oldwick, N.J.-based A.M. Best in the report.

“Over the recent term, property, marine, energy and aviation pricing pressures have become more acute, even on the primary side,” A.M. Best added. “It remains to be seen how meaningful, if at all, the impact of catastrophe losses suffered during the first half and extending throughout the balance of the year, will be on both the primary and reinsurance markets for these classes.”

In its annual report, A.B. Best includes a list of Top 50 Global Reinsurance Groups, ranked by unaffiliated gross written premiums in the previous year, in both life and non-life.

This year and last year, Munich Re, Swiss Re and Hannover Re ranked first, second and third respectively – by gross premiums written in 2015.

SCOR ranked fourth this year, up from fifth in 2015. Berkshire Hathaway dropped from fourth to sixth place.

“The market leaders continue to dominate the market, with the top 10 reinsurers of 2015 remaining in the top quintile of the 2016 rankings, writing over 70% of the total life and non-life unaffiliated gross reinsurance premiums written,” A.M. Best stated.

A.M. Best counts the Lloyd’s market as one reinsurer. The Lloyd’s market rose from sixth place in 2015 to fifth place this year.

Two firms reinsuring life only – Reinsurance Group of America and Winnipeg-based Great West Lifeco – ranked sixth and 12th respectively this year.

OdysseyRe – owned by Toronto-based Fairfax Financial Holdings – dropped from 24th place in 2015 to 26th place this year.

“Organic growth and consolidation were the most significant drivers of upward movements in the ranking,” A.M. Best reported. “RenaissanceRe increased six spots in the rankings to No. 20, driven by a 30% growth in gross premiums through completing their acquisition of Platinum, while Arch moved up five places to No. 22, driven by a 25% increase in gross premiums attributable to the consolidation of Watford Re into their reinsurance operations.”


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