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
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • April 2019
04

Global reinsurance capital down by 5%

Open-access content 24th April 2019

Total capital in the global reinsurance industry fell by 5% to $462bn (£400.8bn) over 2018 after unrealised investment losses and mergers and acquisitions (M&A).

2


That is according to a new index by Willis Re, which shows that shareholder equity in the 32 reinsurance companies studied declined by 10% to $335.7bn.

This reversed the 8% of equity growth recorded in 2017, while it was also found that alternative capital grew by 6% last year.

"Overall shareholders equity figures for the index suffered a negative impact due to unrealised investment losses, owing to external factors largely beyond the control of risk carriers, as well as shareholder buybacks and dividends," said Willis Re CEO, James Kent.

Index capital reduced by $13.7bn after the exits of Validus and XL Catlin through M&A last year.

But the overall capital decrease in the index was due to unrealised investment depreciation of $21.4bn, mainly thanks to failing equity markets and rising bond yields.

Companies paid out the majority of their $20.5bn in net income as dividends and buybacks, which together reduced index capital by $17.6bn.

The researchers also conducted an in-depth analysis on a subset of firms that made disclosures related to natural catastrophes (nat cat) losses and prior year reserve releases.

This showed that the subset's reported return on equity (RoE) recovered from the nat cat-affected 1.4% recorded in 2017 to reach 4.2% last year.

Normalising for a 4% nat cat loss, and removing the benefit of reserve releases, resulted in an underlying RoE of 2.7% for the subset, compared with 3.8% in 2017.

The main driver of the improvement in RoE and drop in underlying RoE was the combined ratio. The headline combined ratio for the subset recovered from 2017's 107.4% to 99.2%. 

However, once the 4.6 percentage points of reserve releases are removed, along with 8.6 percentage points of nat cat losses, the subset had an ex-nat cat accident year combined ratio of 95.3%, compared with 94.6% in 2017. 

"Remedial actions taken by many risk carriers in 2018 were essential and we are seeing an acceleration of these actions in 2019 as companies seek improved underwriting terms and rates to drive RoEs," Kent added.


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our April 2019 issue of The Actuary.
Click here to view this issue
Filed in:
04
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Capital contractor

England, London
£700 - £1000 per day
Reference
118813

Senior Financial Risk Actuary

London, England
£55000 - £100000 per annum
Reference
118812

Pricing Technology Lead

England, London
£60000 - £70000 per annum
Reference
118811
See all jobs »
 
 

Most-Popular

 
 
 

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
​
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

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200