Global reinsurers saw major falls in investment returns last year, hitting their overall earnings and capital positions.
Aon’s Reinsurance Aggregate: Results for the Year to 31 December 2022 analyses the financial results of 19 companies that together underwrite more than 50% of global life and non-life reinsurance premiums. It shows that total investment returns fell by 61% to US$12.3bn, and net income dropped by 56% to US$9.6bn, representing a return on equity of 5.2%. Total shareholders’ equity fell by 21% to US$157bn.
Trends highlighted by the study include constraints in reinsurer underwriting appetites – particularly for property catastrophe business – while sharply rising interest rates and falling stock markets eroded asset values.
Aon head of business intelligence Mike Van Slooten called the losses “temporary and largely non-economic in nature”.
He added: “Renewal outcomes in 2023 and the tailwind of higher interest rates have improved the outlook for reinsurers and we expect new capital inflows to begin relieving current capacity constraints when earnings delivery is confirmed in reported results.”