The global reinsurance sector achieved premium growth of 12.3% last year, according to a Gallagher Re market report.

Gallagher Re says the increase was supported by rate increases for reinsurance and commercial insurance business and for the sector, it was a “strong” result even if the figure was down from 16.6% in 2021.

About 60% of companies reported double-digit premium growth with the most significant rises due to targeted expansion as the reinsurance market hardened, the broker says in its latest Reinsurance Market Report.

The bi-annual report, which tracks the capital and profitability of the global reinsurance industry, says the average combined ratio on both a reported and underlying basis was healthy.

Reported combined ratio was broadly stable at 97.8% and the underlying combined ratio improved to 98.8% from 99.7% in 2021.

Reinsurers’ combined accounting capital totalled $US638 billion ($953 billion) at the end of last year, down 12% from the restated 2021 base, due to a decline in the value of investments, the report says.

“This US GAAP/IFRS accounting view, however, masks that in economic terms solvency remained strong and in fact generally increased during the year,” Gallagher Re says.

The average return on equity (ROE) declined to 6.8% from 11.4% to 6.8% due to a swing in investment gains.

On an underlying basis, however, the ROE jumped to 11.2% from 6.3%.

“The decline in reported ROE masks a notable improvement in underlying performance, to the point where the reinsurance industry’s underlying1 ROE exceeded its cost of capital for the first time since at least 2013,” the report says.

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