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
  • Sections
  • News

Reinsurance capital grows by 7% worldwide

Open-access content Tuesday 13th April 2021
Reinsurance capital grows by 7% worldwide

Total capital dedicated to reinsurance grew by 7% to reach $658bn (£490bn) last year worldwide, while there were also signs of an underlying improvement to the industry's combined ratio.

That is according to new research by Willis Re, which said that the increase in capital was driven primarily by strong investment market appreciation in the second half of the year.

Capital was raised by both incumbents and new entrants, however, returns to shareholders exceeded those new investments.

After analysing the financial results of a subset of 17 reinsurers, the researchers found that their  combined ratio deteriorated from 100.6% in 2019, to 104.1% in 2020, due entirely to COVID-19 loss reserving. 

However, on an underlying basis – normalising COVID-19 and natural catastrophe losses and excluding reserve releases – the combined ratio improved from 103.1% to 100.7%, which was the first full-year improvement since at least 2014.

James Kent, global CEO of Willis Re, which is the reinsurance business of Willis Towers Watson, said: “Such a solid development of the global reinsurance industry’s capital base would hardly have been expected earlier last year, as the COVID-19 pandemic was gathering pace.  

“Willis Re’s analysis provides clear evidence of the strength and resilience of reinsurance market capacity.”

Despite these positive sentiments, the latest figures also show that the reinsurance industry's return on equity (ROE) remains under pressure. 

The subset of 17 companies’ reported ROE fell from 9.7% to 2.7% last year, and the underlying ROE also fell from 3.2% to 1.3%. 

The underlying deterioration was due to declining investment yields more than offsetting the better underlying underwriting performance. On both a reported and underlying basis, the ROE remained well below the industry’s cost of capital.

“Reinsurers and insurers alike must contend with the challenges of low interest rates,” Kent continued.

“But, looking through the turbulence of COVID-19 and nat cat claims, and a declining reliance on reserve releases, there is a clear improving trend in underwriting profitability.”

 

Image credit: iStock

Author: Chris Seekings

Filed in
News
Topics
Reinsurance
Global

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Catastrophe Analyst

London, England
£70000 - £100000 per annum
Reference
146055

Catastrophe Analyst

London, England
Up to £50000 per annum + + Bonus
Reference
146053

Principal Pricing Analyst

England, London
£60000 - £70000 per annum
Reference
146052
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