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Global reinsurer capital reaches record level of USD505 billion at December 31, 2012, according to Aon Benfield study
Aon Benfield Aggregate pre-tax profit more than doubles to USD35.7 billion – the highest level since the onset of the financial crisis

LONDON, 9 April 2013 – Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON), today launches the latest edition of its Aon Benfield Aggregate (ABA) report, which analyses the financial results of the world’s leading reinsurers in 2012.

Aon Benfield Analytics estimates that global reinsurer capital totaled a record USD505 billion at December 31, 2012, an increase of 11% (USD50 billion) relative to December 31, 2011. This calculation is a broad measure of capital available for insurers to trade risk with and includes both traditional and non-traditional forms of reinsurance capital.

The firm's latest study found that capital reported by the ABA group of 31 leading reinsurers increased by 12% (USD33 billion) to USD313 billion, driven primarily by USD29.5 billion of net income and USD15.9 billion of unrealized capital gains. Dividends and share buybacks rose marginally to USD16.1 billion.

Further key findings of the ABA study include:

  • Gross property and casualty (P&C) insurance and reinsurance premiums written by the ABA rose by 6% to USD192 billion, principally driven by higher pricing in loss-affected lines and territories, with a number of companies deploying new sidecar capacity for catastrophe business.
  • The P&C combined ratio stood at 92.6%, down from 105.1% in 2011, representing an underwriting profit of USD11.7 billion, with all but two constituents reporting positive results.
  • The contribution to the combined ratio from catastrophe losses totaled 7.5 percentage points (USD11.9 billion), down from 20.0 percentage points (USD29.6 billion) in 2011.
  • The benefit to the combined ratio from favorable development of prior year reserves was 4.3 percentage points (USD6.8 billion), down from 5.0 percentage points (USD7.5 billion) in 2011.
  • Pre-tax profits reported by the ABA companies more than doubled to USD35.7 billion, the highest level since the onset of the financial crisis in 2008, with all 31 constituents reporting positive results.
  • The level of ABA engagement with third party capital has increased significantly over the last 18 months. This has mainly manifested itself in sidecar sponsorship and the formation of in-house fund management operations.

Mike Van Slooten, Head of Aon Benfield’s International Market Analysis team, said: "The low interest rate environment not only has impacted what reinsurers earn on their invested funds but it has added significantly to the competitor landscape. Diversified yield seeking investors are now adding material pressure (in terms of price and value competition) and benefits (in terms of lower cost underwriting capital) to the reinsurance market. We expect material changes to the capital structure of the largely equity financed reinsurance market as material new flows of capital are integrated into reinsurance underwriting capital."

Ends
To access the report, visit: http://thoughtleadership.aonbenfield.com/Documents/201304_marketanalysis_fy_2012.pdf


*Notes to editors
The Aon Benfield Aggregate (ABA) report is produced on a half-yearly basis, to allow the inclusion of certain companies that do not report quarterly. The aim is to provide a more representative view of the global property and casualty reinsurance marketplace. A full list of the 31 ABA companies can be found in Appendix 1. All are publicly-listed, with the exception of two US subsidiaries of Berkshire Hathaway, namely General Reinsurance Corporation (Gen Re) and National Indemnity Company (NICO).

Alleghany Corporation has replaced Transatlantic Holdings, Inc. as a constituent of the ABA, as a result of the acquisition that became effective on March 6, 2012. Alleghany’s published results only include the contribution of Transatlantic from that date, but for the purposes of the ABA capital calculation, Transatlantic’s reported capital has been included in previous year-end totals. Mapfre SA is a new addition to the ABA, while Flagstone Reinsurance Holdings SA has been removed following its acquisition by Validus Holdings Ltd on November 30, 2012. Prior year comparisons have been restated to reflect these changes.

About Aon Benfield
Aon Benfield, a division of Aon plc, is the world’s leading reinsurance intermediary and full-service capital advisor. We empower our clients to better understand, manage and transfer risk through innovative solutions and personalized access to all forms of global reinsurance capital across treaty, facultative and capital markets. As a trusted advocate, we deliver local reach to the world’s markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating agency advisory. Through our professionals’ expertise and experience, we advise clients in making optimal capital choices that will empower results and improve operational effectiveness for their business. With more than 80 offices in 50 countries, our worldwide client base has access to the broadest portfolio of integrated capital solutions and services. To learn how Aon Benfield helps empower results, please visit aonbenfield.com.

About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 62,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsorship with Manchester United.

Media Contacts

David Bogg
Aon Benfield
t: +44 (0)20 7522 4016
e: david.bogg@aonbenfield.com 

Andrew Wragg
Aon Benfield
t: +44 (0)20 7522 8183
e: andrew.wragg@aonbenfield.com     

Alexandra Lewis
Aon Benfield
t: +44 (0)20 7882 0541  
e: alexandra.lewis@aonbenfield.com

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