The profitability of leading global reinsurance carriers worsened in 2019, helped by an uptick in demand for cover and an easing in natural catastrophe losses, Aon’s latest Reinsurance Aggregate report says.

The net combined ratio stood at 100.3% last year, up from 99.1% in 2018.

The report assesses the performance of 23 reinsurance carriers in the global market responsible for underwriting around half the world’s non-life reinsurance and the majority of life reinsurance.

It says natural catastrophe losses contributed 6 percentage points, down from 7.3 a year earlier, while property & casualty (P&C) gross written premiums rose 9% to $US210 billion ($330.73 billion).

The figures reflect conditions prior to the coronavirus pandemic outbreak.

“We believe this report establishes a useful ‘baseline’ from which to assess the potential impacts of the COVID-19 crisis on the reinsurance sector,” Aon says.

The report finds the operating environment in 2019 was “challenging".

In underwriting, reinsurers were confronted with higher retrocessional costs, adverse development of recent catastrophe losses and deteriorating trends in US casualty business, while interest rates went into reverse amid deteriorating prospects for global economic growth.

However, reinsurers benefited from a modest increase in demand for cover and the re-pricing of loss-impacted business, while natural catastrophe losses subsided to near long- term averages. Investment returns were boosted by a very strong stock market performance and unrealised gains on bond portfolios.

Total capital stood at $US255 billion ($393 billion) at the end of 2019, up 10% from a year earlier, while the total investment underlying ordinary yield was stable at 2.8% and net income virtually doubled to $US18.2 billion ($28.63 billion).

QBE was one of the 23 companies involved in the study, alongside Alleghany, Arch, Argo, Aspen, AXIS, Beazley, Everest Re, Fairfax, Hannover Re, Hiscox, Lancashire, Mapfre, Markel, Munich Re, PartnerRe, Qatar Insurance, RenRe, SCOR, Sirius, Swiss Re, Third Point Re and WR Berkley.

The stock market value of the listed companies fell by around a third in the first quarter of 2020, taking the median price-to-book ratio from 1.3x to 0.9x.