Aon Benfield, a reinsurance company and capital advisor of Aon Plc., has released the September 2014 edition of its Reinsurance Market Outlook report. The report provides an analysis of the variables affecting reinsurance buyers as the Jan. 1 reinsurance renewals approach.
The report, “Growth Capital From Growing Reinsurer Capital,” shows that the cost of reinsurance capital for catastrophe risk has decreased to one-third to one-half of the cost of equity capital for insurers in many instances. The increase in multiple-year capacity from reinsurers makes sustainable growth plans of insurers in catastrophe prone regions more plausible, said Aon.
Reinsurance capital had reached $570 billion as at June 30, 2014, an increase of 6 percent over the preceding six months, including $59 billion of alternative capital an increase of more than 18 percent since year-end 2013. Increased insurer capital and low insured catastrophe losses have resulted in stable reinsurance demand, year-over-year, from insurers, despite continued rate decreases in many segments at recent major renewals periods.
"Insurers can count on sustainable reinsurance capacity to support growth in their toughest geographies and most difficult lines,” said Bryon Ehrhart, CEO of Aon Benfield Americas. “In the anticipated renewal market conditions, insurers have new avenues to reduce risk, release capital and improve net results."
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