Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • April 2016
04

Global reinsurance capital reduces by 2% in 2015

Open-access content Wednesday 6th April 2016 — updated 5.50pm, Wednesday 29th April 2020

Total global reinsurance capital stood at $565bn (£399bn) at 31 December 2015, down by 2% from 2014, as estimated by Aon Benfield.

2


The reinsurance intermediary said the figures comprised capital from both traditional and alternative markets.

Based on its Aon Benfield Aggregate (ABA) report, which analyses the 2015 financial results of 27 major reinsurers, traditional capital decreased by 4% to $393bn (£278bn), driven by the strengthening of the US dollar and the impact of rising interests rates on bond valuations.

In contrast, alternative capital, sourced from third-party investors such as hedge funds, sovereign wealth funds, pensions and mutual funds, rose by 12% to $72bn (£51bn). 

"This is reflected in robust levels of catastrophe bond issuance, further expansion of fully collateralized placements and growing utilisation of 'sidecar' vehicles," said the report.

Covering 10 years of data, the document showed alternative capital had been increasing its market share. It added reinsurers continued to incorporate alternative capital to lower their cost of underwriting. 

Total premiums written by the ABA companies stood at $282bn (£199bn) in 2015, of which $206bn (£146bn) related to property and casualty (P&C) business. 

The report found overall profitability remained relatively stable, but earnings were becoming increasingly reliant on benign catastrophe experience and material reserve releases. Growing price competition and low interest rates continue to pressure underlying returns on equity.

In terms of underwriting performance, P&C underwriting profit fell by 9% to $15.1bn (£10.7bn), of which $8.4bn (55% of the total) was derived from favourable prior year loss reserve development.

Mike Van Slooten, co-head of Aon Benfield's market analysis team, said: "The growing pressure on underlying earnings should be viewed against this backdrop, but in reality is likely to drive further M&A activity in the short to medium term."

This article appeared in our April 2016 issue of The Actuary .
Click here to view this issue

You may also be interested in...

2

Flood Re receives regulatory approval

Reinsurance scheme Flood Re has been authorised to operate by the Prudential Regulatory Authority and the Financial Conduct Authority with effect from today.
Friday 1st April 2016
Open-access content
2

General insurers 'resilient' to market-wide scenarios, PRA says

General insurance firms are resilient against events that affect the market, according to a stress test conducted by the Prudential Regulation Authority (PRA).
Tuesday 26th April 2016
Open-access content
2

As new state pension goes live, 75% of young people set to lose out

The new state pension has come into force today, but three quarters of people in their twenties may lose out on average £19,000 over the course of their retirement, according to the Pensions Policy Institute (PPI).
Wednesday 6th April 2016
Open-access content
2

Life expectancy falls thanks to a spike in flu and dementia-related deaths

The life span in England and Wales for men fell by 0.2 years and for women by 0.3 between 2014 and 2015, according to the Office for National Statistics (ONS).
Thursday 7th April 2016
Open-access content
ta filler

Armed forces spouses to get national insurance credit towards state pension

Spouses and civil partners of people who joined the armed forces on an overseas posting will be given a new national insurance credit that counts towards their state pension.
Thursday 7th April 2016
Open-access content
2

Birmingham capital for 'crash for cash'

Birmingham has the highest number of motor fraudulent claims, according to Aviva.
Tuesday 5th April 2016
Open-access content
Filed in
04
Topics
Reinsurance
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Reserving Analyst

London (City of)
Negotiable
Reference
149485

Senior GI Modeler - Capital and Planning

London (Central)
£ excellent
Reference
149436

Risk Oversight Manager

Flexible / hybrid with a minimum of 2 days per week office-based
£ excellent
Reference
149435
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ