The Aon Benfield Aggregate Results for the year ended December 31, 2013
Contents Global Reinsurer Capital
Premium Income Earnings
Return on Equity
ABA Business Model Evolution
Who Are The New Investors?
How Is New Money Being Deployed?
Implications for ‘Traditional’ Reinsurers
Convergence in Action
Financial Strength Ratings
Appendix 1: ABA Data
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.
Global Reinsurer Capital Aon Benfield estimates that global reinsurer capital totaled USD540 billion at December 31, 2013, an increase of 7% relative to December 31, 2012. This calculation is a broad measure of capital available for insurers to trade risk with and includes both traditional and alternative forms of reinsurer capital. Exhibit 1: Global Reinsurer Capital 600
Global Reinsurer Capital
Source: Company reports, Aon Benfield Analytics
Major insurers and reinsurers generally maintained their solid operating performance during 2013, aided by economic recovery in the United States, exposure growth in emerging markets and below average insured catastrophe losses. However, the support to reported capital positions was muted by unrealized losses on bond portfolios, driven by rising interest rates associated with ‘tapering’ of the Federal Reserve’s quantitative easing program. The involvement of capital market investors in the reinsurance sector through non-equity participations continues to expand, presenting a growing challenge to ‘traditional’ reinsurer business models.
A NOTE OF CAUTION ON THE VAGARIES OF INSURANCE ACCOUNTING Accounting choices can influence reported results. There have always been inconsistencies in the methodology applied to the calculation of co