According to Aon's Reinsurance Aggregate (ARA) report, leading global reinsurers witnessed solid premium growth and underwriting outcomes in the first half of 2018.
The ARA report series examines 21 prominent global reinsurance carriers that together underwrite more than 50% of the world's life and non-life reinsurance premiums. The composite is seen as an acceptable proxy for the reinsurance sector as a whole.
Rising interest rates, widening credit spreads, and falling stock markets harmed reinsurers' earnings and equity positions. These consequences are seen across the worldwide insurance and reinsurance industries, says Aon, a renowned global professional services organization.
1H 2022 saw high market volatility. The 2021 pandemic-related inflationary increase was compounded by Russia's invasion of Ukraine in February, triggering aggressive interest rate hikes and recession fears.
The long-awaited adjustment to rising interest rates will enhance reinsurers' profitability through greater investment returns, but the rapidity of the move is affecting asset prices short-term. High inflation creates uncertainty about future and legacy loss costs, which may require higher pricing or additions to prior-year reserves. We publish the ARA to help re/insurers handle market volatility, retain resilience, and make smarter business decisions.
2022 forecast
The research says Hurricane Ian will affect second-half underwriting results. Rising interest rates will also reduce investment returns and book prices. 2022 appears to be another bad year for reinsurers.
1H2022 ARA highlights:
Gross and net P&C insurance and reinsurance premiums grew 10% at constant exchange rates.
P&C underwriting profit grew 22% to $7.4bn, with a net combined ratio of 93.0%, down from 93.7% in 2021's first half.
Total investment return was $1.6bn, compared to $17.5bn in the first half of 2021.
Net income attributable to common shareholders was $1.3bn, or 0.4% of average equity.
Total equity fell $39bn to $171bn at June 30, 2022, reflecting $30bn in unrealized bond losses booked in other comprehensive income.
Alleghany, Arch, Aspen, AXIS, Beazley, Everest Re, Fairfax, Hannover Re, Hiscox, Lancashire, Mapfre, Markel, Munich Re, PartnerRe, QBE, Qatar Insurance, RenRe, SCOR, Swiss Re, SiriusPoint and WR Berkley were studied.
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