Total global reinsurer capital fell by 3% last year to $455bn at the end of December 2011, Aon Benfield said today.
Publishing the latest edition of its Aon Benfield Aggregate report, the reinsurance intermediary found that after a reduction in capital of 6% in the first quarter, the three subsequent quarters each saw growth of 1%.
The reported shareholders' funds of the 28 leading reinsurers covered by the ABA group totalled $251bn at the end of 2011 - an increase of 1.7% over the year. This figure - an 'all time high', according to Aon Benfield - was a result of a 3.4% reduction in the first quarter being followed by growth of 1.7%, 1.1% and 2.3% in the three subsequent quarters.
According to Aon Benfield, the primary contributors to the capital growth were net income of $11.7bn and unrealised capital gains of $5bn. The main factors offsetting this were dividends and share buybacks to the tune of $13.7bn.
For the ABA as a whole, there was a fall in the return on average common equity, from 10.4% in 2010 to 4.6% in 2011. This was driven by record catastrophe losses and what Aon Benfield said was 'the relative absence and unrealised investment gains'.
Mike Van Slooten, head of Aon Benfield's international market analysis team, said: 'The reinsurance sector remains strong after a testing year in 2011 and continues to provide very efficient underwriting capital to insurers.
'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.'