Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc, releases the September 2014 edition of its flagship Reinsurance Market Outlook report, which provides a comprehensive analysis of the key variables affecting reinsurance buyers in the approach to the January 1 reinsurance renewals.
The report, Growth capital from growing reinsurer capital, reveals that the cost of reinsurance capital for catastrophe risk has decreased to one third to one half of the cost of equity capital for insurers in many instances. The significant increase in multiple-year capacity from reinsurers makes sustainable growth plans of insurers in catastrophe prone regions more plausible.
Reinsurance capital had reached a record USD570bn as at June 30, 2014, an increase of six percent over the preceding six months (YE2013: USD540bn), including USD59bn of alternative capital – an increase of more than 18% since year end 2013.
Increased insurer capital and low insured catastrophe losses have resulted in stable reinsurance demand year-over-year from insurers despite continued rate decreases in many global segments at recent major renewals periods.
In the six months to June 30, 2014, insurer capital grew by six per cent to around USD4.2trn globally (YE2013: USD4.0trn).
Bryon Ehrhart, Chief Executive Officer of Aon Benfield Americas, said: “Insurers can count on sustainable reinsurance capacity to support growth in their toughest geographies and most difficult lines. In the anticipated renewal market conditions, insurers have new avenues to reduce risk, release capital and improve net results.”
As at September 1, the industry had sustained USD27bn in insured losses in 2014 – just 44% of the 10-year average annual loss (USD62bn) – with severe thunderstorm remaining the costliest peril, having caused USD9.1bn of insured losses in the United States and USD2.6bn of insured losses in Europe.
Click here for the full report.
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