Reinsurers have achieved reasonable returns on capital and compensated investors while increasing capacity despite catastrophes that have inflicted $190 billion in insured losses, according to Swiss Re’s Sigma, as quoted in “The Capital Challenge: Reinsurance Capacity Overshadows Market,” a special report from A.M. Best. Balance sheets have remained robus, though insured losses have dragged on earnings, according to the report.

“The challenge of managing loss accumulation from global catastrophes was evident in 2011, and since 2008 reinsurers have faced numerous hurdles due to a weakened global economy: deteriorating investment returns; more volatile investments; suppressed growth opportunities; increased client retentions and competitive pricing,” A.M. Best said.

Pricing has been competitive due to excess capacity, which has increased due to an influx of third-party capital, A.M. Best said. This is most evident in longer tail casualty classes and pressures shorter tail specialty and property classes to make up the shortfall.

“While the capital markets historically have provided capacity out on the tail for property/catastrophe risk, generally in the form of catastrophe bonds, industry loss warranties (ILWs) and other collateralized structures, it now appears investors, asset managers and bankers are showing more interest in the lower layers of catastrophe programs, as well as in other specialty and casualty classes,” A.M. Best said.

Reinsurance brokers have reported $45 billion in additional capacity has entered the reinsurance market, representing 14 percent of the current global property limit, A.M. Best said, as hedge funds, pension funds, endowments and trusts have been lured by the favorable returns, float and uncorrelated risks. “Front-line sources indicate that capital is entering methodically and precisely, not just rushing in blindly,” A.M. Best said.

Not all of the capital is dedicated to increasing capacity; a substantial amount supports investment risks, as investors have collaborated with traditional reinsurers or collateralized facilities with operational infrastructure, established relationships and the intellectual capital to succeed at building a profitable underwriting portfolio, A.M. Best said.

The top 10 continue to be the same as last year's ranking, with Berkshire Hathaway and Lloyd's switching positions, as well as PartnerRe and Korean Reinsurance Co. switching spots. 

Top 50 Global Reinsurance Groups, ranked by gross premium written in 2012 (in U.S. millions):

1 Munich Reinsurance Co. - $37,251

2 Swiss Reinsurance Co. Ltd. – $31,723

3 Hannover Rueckversicherung AG - $18,208

4 Lloyd’s - $15,785

5 Berkshire Hathaway Inc. - $15,059

6 SCOR S.E. - $12,576

7 Reinsurance Group of America Inc. - $8,233

8 China Reinsurance (Group) Corp. - $6,708

9 Korean Reinsurance Co. - $5,113

10 PartnerRe Ltd. - $4,712

11 Everest Re Group Ltd. - $4,311

12 Transatlantic Reinsurance Co. - $3,577

13 London Reinsurance Group Inc. - $3,319

14 Assicurazioni Generali SpA - $2,979

15 General Insurance Corporation of India - $2,776

16 XL Group plc - $2,364

17 QBE Insurance Group Ltd. - $2,265

18 MAPFRE RE, Compania de Reaseguros, S.A. - $2,256

19 The Toa Reinsurance Co., Ltd. - $2,155

20 Odyssey Re Holdings Corp. - $2,004

21 R+V Versicherung AG - $2,017

22 Tokio Marine Holdings Inc. - $1,966

23 Catlin Group Ltd. - $1,860

24 Axis Capital Holdings Limited - $1,830

25 Caisse Centrale de Reassurance - $1,719

26 MS&AD Insurance Group Holdings Inc. - $1,700

27 Amlin plc - $1,592

28 RenaissanceRe Holdings Ltd. - $1,552

29 IRB - Brasil Resseguros S.A. - $1,365

30 Arch Capital Group Ltd. - $1,282

31 Deutsche Rueckversicherung AG - $1,280

32 Aspen Insurance Holdings Ltd. - $1,228

33 White Mountains Insurance Group Ltd. - $1,179

34 Validus Holdings Ltd. - $1,154

35 Endurance Specialty Holdings Ltd. - $1,119

36 ACE Ltd. - $1,070

37 American Agricultural Insurance Co. - $955

38 Alterra Capital Holdings Ltd. - $899

39 Pacific LifeCorp - $882

40 Maiden Holdings Ltd. - $864

41 ACR Capital Holdings Pte Ltd. - $765

42 Allied World Assurance Co. Holdings, AG - $760

43 Montpelier Re Holdings Ltd. - $735

44 African Reinsurance Corp. - $648

45 NKSJ Holdings Inc. - $608

46 Milli Reasurans Turk Anonim Sirketi - $576

47 Platinum Underwriters Holdings Ltd. - $570

48 Wilton Re Holdings Ltd. - $542

49 W.R. Berkley Corp. - $509

50 Central Reinsurance Corp. - $495

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access