Global: Reinsurers' capital base rise 13% in 1H
Source: Middle East Insurance Review | Oct 2023
Capital dedicated to the global reinsurance sector totalled $709bn at half year 2023, an increase of 13% versus the restated full-year 2022 base, according to the latest “Reinsurance Market Report”, published by Gallagher Re.
The rise in capital was due to strong investment performance and steadily improving underwriting results. There was a notable lack of new capacity despite continued favourable market conditions.
Rate increases were the main driver of the continued strong premium growth of 8.7%. Volume growth was limited, partly due to rising attachment points and a shift in business mix.
The combined ratio improved on a reported basis to 87.6% (1H2022: 89.2%) and on an underlying basis to 95.4% (IH2022: 99.7%). The underlying combined ratio, in particular, was the strongest underwriting performance achieved over the ten years Gallagher Re has conducted this analysis.
The average return on equity (ROE) reported by reinsurers increased to 13.4%, a material improvement over 10.2% at 1H2022, driven by improved underlying underwriting margins and higher running investment income. The reported ROE increased even more strongly to 19.3% from 4.4% at 1H2022, driven additionally by investment gains. For a second consecutive year, the underlying ROE is well above the cost of capital after an elongated period of sub-par returns. M