NU Online News Service, Dec. 10, 3:23 p.m. EDT
Reinsurance capital has grown by 17 percent over the end of 2009 primarily on the strength of investment returns, according to a report released by Aon Benfield.
The reinsurance brokerage firm, a subsidiary of Chicago-based insurance broker Aon Corp., released its Aon Benfield Aggregate nine month report for the 30 largest traditional global reinsurers that reports on a quarterly basis.
Aon Benfield said as of Sept. 30, it estimates that global reinsurer capital totaled $470 billion based on companies that report quarterly. The increase is a 17 percent increase over the end of year 2009 and includes 7 percent growth in the third quarter.
The improvement was largely the result of realized and unrealized investment returns and the capital raise by National Indemnity to acquire Burlington Northern Santa Fe Railway.
The broker said that the expansion of reinsurance capital "continued to exceed growth in demand for capacity in most lines and geographic areas."
Aon Benfield said its aggregate study of 30 reinsurance companies for the first nine months of this year showed:
o Net income and unrealized investment gains made strong contributions, adding $19.1 billion and $11.2 billion.
o Gross property and casualty premiums written were essentially flat at $104 billion.
o The combined ratio for the group of reinsurers rose 5.7 points to 96.8. This was primarily due to catastrophe losses.
o Operating income fell 24 percent to $13.7 billion, but pre-tax profits rose 31 percent to $23 billion. This was driven by a positive swing in realized and unrealized capital gains and or losses of $9.7 billion.
o Underwriting profit fell 64 percent to $2.6 billion, despite an increased contribution from prior-year reserves of $3.7 billion, the report said.
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