“The reinsurance sector remains strong after a testing year in 2011, and continues to provide very efficient underwriting capital to insurers,” says Mike Van Slooten, head of Aon Benfield's international market analysis team in a statement. “The volatility sustained by reinsurers was substantial and materially improved the earnings and capital reported by insurers affected by unusual frequency and severity of events occurring in 2011. The value proposition of reinsurance has rarely been so clearly demonstrated.”

The Aon Benfield Aggregate (ABA) of 28 reinsurers reports shareholders' funds of $251 billion, an increase of $4 billion from the prior year's $247 billion.

The growth was driven by a few companies, principally Swiss Re, White Mountains, Hannover Re and ACE, the report says. The vast majority of other companies in the index saw shareholders' funds drop, some as much as 30 percent.

Gross property and casualty premiums written by the ABA group rose more than 11 percent to $136 billion from the prior year's $122 billion, the report says.

The group showed a combined ratio of 108.2 for 2011, a deterioration of 13.5 points from the 2010 combined ratio of 94.7.