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Capacity spikes before mid-year renewals

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Global reinsurer capital is at peak levels ahead of the mid-year renewals in June and July, says reinsurance broker Aon Benfield’s latest report.

Its latest report says major losses are below average so far this year, and capital market conditions are relatively benign.

Japan, India and South Korea dominated the April 1 treaty reinsurance renewals.

“Traditional reinsurers continue to show strong appetite for this business and buyers in these markets found ample capacity to meet their risk transfer needs and support geographic and product growth aspirations,” Aon Benfield says.

Global reinsurer capital was $US605 billion ($779 billion) at the end of last year, up 2% from 2016. Traditional capital made up $US516 billion ($664 billion) of the pool and alternative capital the remaining $US89 billion ($115 billion).

The Aon Benfield Aggregate, which tracks 21 major reinsurers, says the sector recorded gross written premium of $US249 billion ($321 billion) last year.

Net natural catastrophe losses of $US23.6 billion ($30.4 billion) contributed 16.4 percentage points to the combined operating ratio of 107.4% last year.

Pre-tax profit fell 75% to $US5.1 billion ($6.6 billion).

In the alternative capital segment, further growth is expected this year after strong momentum from last year continued into the first quarter.

London is emerging as a mainstream onshore alternative, while Singapore is bidding to become a hub for insurance-linked securities in Asia, Aon Benfield says.