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Reinsurers looking for diversity, Willis Re says

Reinsurers are continuing to diversify their portfolios as they look to improve underwriting performances, according to a half-year market report from Willis Re.

“Due to ongoing pricing pressure, reinsurers continue to moderate their exposure to catastrophe-exposed business, including for their US business,” the report says.

Diversification has targeted structured property and casualty, life, health and specialty lines such as cyber and mortgage business.

Premium growth for some companies is also supported by the further allocation of capital to primary insurance business.

Net written premium for companies in the Willis Reinsurance Index increased 2% to $US129.8 billion ($162.4 billion) in the half.

The reported combined operating ratio increased to 95% from 94.1% after a negative impact from the UK change in the Ogden rate, used to estimate injury compensation payouts, and despite a reduction in natural and man-made catastrophe losses and reserve releases.

Net income declined to $US8.3 billion ($10.4 billion) from $US14.5 billion ($18.1 billion), while continued active capital management returned $US10.8 billion ($13.5 billion) through share buybacks and dividends.

Shareholder funds totalled $US348.2 billion ($435.6 billion) at the half-year, a 1.2% increase from the end of last year, while alternative capital increased to $US75 billion ($93.8 billion) from $US70 billion ($87.6 billion) at the previous half-year.

Insured natural catastrophe losses fell to $US20 billion ($25 billion) compared with $US30 billion ($37.5 billion) in the corresponding half last year, and significantly below the 10-year average of $US29 billion ($36 billion).

See ANALYSIS.