Cat Losses Nip Reinsurers

New numbers from Aon Benfield underscore the extent to which losses from natural catastrophes have dinged reinsurers.

The Aon Benfield Aggregate (ABA) figures global reinsurer capital at $445 billion on June 30, down 5 percent from $470 billion recorded for the industry on December 31, 2010. Nonetheless, as a whole the 28 firms that comprise the ABA fared better in the second quarter of 2011 than they did in the first as growth of 1 percent was observed in Q2, after a reduction of 6 percent in Q1.

The numbers also convey increased demand for reinsurance as gross property and casualty (P&C) premiums written by the ABA totaled $74.4 billion in the first half of 2011, an increase of 10.5 percent. Yet, the impact of costly natural disasters was readily apparent in underwriting results as the combined ratio jumped from 99.7 percent to 120.6 percent. “The deterioration was driven by an increase in the level of catastrophe losses from $5.4 billion to $18.2 billion,” the reports states. “Attritional claims showed a marked improvement. In the aggregate, prior year reserve releases continue to provide significant, albeit weakening, support to reported results.”

Among the ABA constituents, only ACE reported capital growth of any note in the first half of 2011 as most reinsurers reported a decline, driven by the impact of catastrophe losses on earnings, as well as dividend payments and share buybacks.

As for premium distribution, the top ten reinsurers remained unchanged and continued to dominate market share, collecting 74 percent of premiums written. By volume, Munich Re wrote the most business in the first half of 2011 coming in 17.9 percent. Swiss Re was second with 12.9 percent and ACE was third at 10.4 percent.