Aon Media Center

(Re)Insurance Industry Enters Calmer Waters According to New Study

London - 16 January 2004 - The global reinsurance industry is finally showing signs of improvement but still needs to focus on underwriting profitability in order to sustain and grow its balance sheets, according to the latest report on the financial strength of the worlds leading reinsurers 'A Financial Analysis of the Global (Re)Insurance Industry' commissioned by Aon Limited from Oxford Metrica.


The events of 11 September 2001 followed by the meltdown in the worlds stock markets left the global (re)insurance industry trying to chart a course through what Aon Limited chairman and chief executive officer Dennis Mahoney has described as "the perfect storm".


Over the last two years Aon has been monitoring and reporting on the effect that these twin shocks have had on the financial status of the industry. The latest update on the original report 'Insurance and the Stock Market The Asset Test', examines the financial performance and underlying strength of the 25 largest reinsurers which have a combined market capitalisation of just over US$534 billion, representing almost 99% of the total market capitalisation of the industry.


"Increased premiums and tighter terms and conditions have led to a growth in total premiums written and some improvement in combined ratios, but not yet to real balance sheet recovery," said Dr Alan Punter, managing director, Chairmans Office at Aon Limited.


"As a result, the financial strength ratings of many firms have been downgraded further by the rating agencies. However, there is evidence that the downward rating action is beginning to show signs of stabilising and the next year is likely to bring some upgrades to the rating landscape."

Dr Punter added that,

"With stock markets improving and evidence that interest rates may have bottomed out and could rise, further relief is also anticipated on the asset side of companies' balance sheets."

Note to Editors

Aon is the UK's largest insurance broker and provider of risk management services, a major force in reinsurance and number four in the UK human capital consulting market. With more than 10,000 staff spread across 90 UK offices, Aon combines an in-depth knowledge of the UK market with an unmatched global reach and perspective. Aon's structure cuts across boundaries and unites specialists from around the world in global business units. Around the world, Aon posted 2002 revenues of $8.8 billion dollars, with more than 55,000 employees in 600 offices in more than 125 countries, servicing clients' requirements at a global level whilst responding to clients specialist needs in individual markets.


Oxford Metrica is an independent strategic advisory firm. The firm addresses the CEO agenda and focuses on risk, value, reputation and governance - the strategic aspects of financial performance. The firm provides advisory, analytical and transactional services for financial and corporate clients worldwide. Oxford Metrica is about ideas with impact.


For further information please contact:

Sally Coode-Bate
(Aon Corporate Affairs)
Tel: 020 7505 7478

Emily Weston
(Financial Dynamics)
Tel: 020 7269 7231

This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results, depending on a variety of factors. Potential factors that could impact results include the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, pension funding, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual costs of resolution of contingent liabilities and other loss contingencies, the heightened level of potential errors and omissions liability arising from placements of complex policies and sophisticated reinsurance arrangements in an insurance market in which insurer reserves are under pressure, and the timing and resolution of related insurance and reinsurance issues relating to the events of September 11, 2001. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, are contained in the Company's filings with the Securities and Exchange Commission.


Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only.

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