Superstorm Sandy was the greatest source of claims in a year otherwise substantially lighter in global catastrophes than 2011—but most of the losses wrought by the Northeast disaster were retained by insurers and not their reinsurers, according to a report from reinsurance intermediary Aon Benfield.
Additionally, supply continued to exceed demand in most global regions to start 2013.
Surplus among NU's Top 20 U.S. Reinsurers increased 12.3 percent to $123.61 billion and continued to increase to $128.17 billion by 2013's first quarter.
A group of 19 U.S. insurers comprising the Reinsurance Association of America (RAA) saw its 2013 first-quarter net income more than double to $3.4 billion, compared to the prior year.
The RAA companies had a combined net underwriting gain of $1.2 billion compared to a loss of $69.3 million during 2011's first quarter.
At April 1 renewals, the big news was the continued amount of capital entering the reinsurance market from hedge funds and pension funds.
The reason for this trend: The reinsurance industry has been able to provide strong returns on equity—resulting in additional capitalization from retained earnings. This has led to competitive prices.
In the U.S., Aon Benfield says reinsurers are responding to the competition from alternative markets by focusing on relationships and continuity with cedents while lowering costs of managing assumed liabilities.
In June, Guy Carpenter reported the influx of alternative-market capital was keeping reinsurance prices low. New capital generated by alternative sources totals about $10 billion over the last 18 months.
June 1 renewal rates for peak property risk in the U.S. were driven downward and they will likely stay that way for the remainder of 2013—with the direction of pricing largely dependent on losses from the 2013 hurricane season, Guy Carpenter says.
To view the 2012 Top 20 Reinsurers list, click here;
To see our Year-End Policyholder Surplus for Top Reinsurers chart, click here.
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