Global reinsurance market: main indicators
Main indicators of the global reinsurance market: 2018-2022
Figures in billions USD
| Indicators | 2018 | 2019 | 2020 | 2021 | 2022 | 5-year average |
|---|---|---|---|---|---|---|
| Gross written premiums | 256.7 | 291.2 | 340.1 | 383.8 | 400.5 | 334.5 |
| Gross non-life written premiums | 175.9 | 195.8 | 227.9 | 262.4 | 280.9 | 228.6 |
| Gross life written premiums | 80.8 | 95.4 | 112.2 | 121.4 | 119.6 | 105.9 |
| Net result | 2.2 | 20.9 | 5.9 | 52.2 | 20.1 | 20.3 |
| Shareholders’ equity | 721.9 | 862.9 | 931.3 | 1067.9 | 926.2 | 902.0 |
| Loss ratio (in %) | 68 | 66.8 | 72.8 | 65.5 | 65.9 | 67.8 |
| Management expenses ratio (in %) | 33.9 | 33.2 | 31.6 | 30.9 | 29.7 | 31.9 |
| Combined ratio (in %) | 101.9 | 100 | 104.4 | 96.4 | 95.6 | 99.7 |
| ROE in % (Return on Equity) | 1.1 | 9.3 | 2.5 | 4.9 | 2.2 | 4.0 |
(1) Data from 129 leading reinsurers
Sources: Atlas Reinsurance Reports 2024 and AM Best
Non-life reinsurance market
In 2022, the 122 non-life reinsurers as a whole reported premiums of 280.9 billion USD, compared with 262.3 billion USD posted in 2021. Non-life business accounted for 70% of the total market (life and non-life) in 2022, against 68% a year earlier.
The non-life reinsurance market is highly concentrated, led by 10 companies accounting for 59.49% of this activity’s underwriting in 2022.
The big European groups are in pole position in the ranking, with Munich Re, Hannover Re, Swiss Re and Lloyd's ranking in the top four places. In a minor revolution in the non-life sector, Hannover Re displaced Swiss Re from second place. These European players are the only ones to have a portfolio with a strong geographical distribution.
The top 10 includes five European reinsurers, three from Bermuda, one from the USA and one from China.
In terms of non-life premiums, the highest growth rates were achieved by Berkshire Hathaway and Hannover Re, with respective growth rates of 19.88% and 18.88%.
Only Lloyd's reported a decline in premiums in 2022.
Read also | Top 10 non-life reinsurers
Technical ratios 2022 of the top 10 non-life reinsurers
| Rank | Company | Loss ratio | Management expenses ratio | Combined ratio |
|---|---|---|---|---|
| 1 | Munich Re | 66.50% | 29.70% | 96.20% |
| 2 | Hannover Re | 71.90% | 27.90% | 99.80% |
| 3 | Swiss Re | 74.20% | 28.20% | 102.40% |
| 4 | Lloyd's | 57.50% | 34.40% | 91.90% |
| 5 | Berkshire Hathaway | 66.10% | 20.30% | 86.40% |
| 6 | SCOR | 84.10% | 29.10% | 113.20% |
| 7 | Everest Re Group | 69.20% | 27.20% | 96.40% |
| 8 | Renaissance Re | 68.50% | 29.20% | 97.70% |
| 9 | China Re | 65.42% | 32.69% | 98.11% |
| 10 | PartnerRe | 59.00% | 27.60% | 86.60% |
Source : Atlas Reinsurance Reports 2024
Life reinsurance market
Life reinsurance has hardly grown in 2022. The only notable change is China Re's ranking from 5th place in 2021 to 7th place in 2022.
Out of the 61 reinsurers underwriting life risks, only three - Canada Life Re, Reinsurance Group of America and Pacific Life Corp - specialize exclusively in this business (1). The remaining 58 companies underwrite both life and non-life risks.
The life market is more concentrated than the non-life market. The top 10 companies account for 92.79% of worldwide premiums. The remaining 51 companies share the remaining 7.21%. The top three places go to Canada Life (2), Swiss Re and Munich Re, with market shares of 21.42%, 13.37% and 12.21% respectively.
In contrast to non-life insurance, the life business has declined in 2022, from 121.400 billion USD in 2021 to 119.585 billion USD in 2022, which represents a decline of 1.5% for life against an increase of 7.07% for non-life.
The Covid-19 pandemic has taken its toll on the life class of business, which has seen a significant rise in mortality, especially in the United States. This catastrophic event had an impact on the 2022 financial statements, with a decline in turnover, shareholders' equity and net income for the life business. The latter dropped from 28.5 billion USD at the end of 2021 to 20.6 billion USD at the end of 2022.
(1) Among the specialized life players we find 4 reinsurers domiciled in Zimbabwe, with a marginal market share.
(2) Canada Life Re is a reinsurance subsidiary of Great-West Lifeco. In 2019, the latter merged its three life insurance companies: The Great-West Life Assurance Company, London Life Ins and The Canada Life Assurance Company.
Read also | Top 10 life reinsurers
European reinsurers
The uncertain economic environment of 2022, marked by the energy crisis, inflation and the war in Ukraine, did not impede the business of the sector's leaders. The four leading European reinsurers took advantage of the rate increases imposed on their ceding companies during the 2022 renewals to increase their turnover from 137.5 billion USD in 2021 to 147.7 billion USD in 2022.
This improvement in reinsurers' premiums has not been good enough to prevent any deterioration of the loss ratio and combined ratio, leading to a 20.9% decline in net income from 6.7 billion USD at the end of 2021 to 5.3 billion USD one year later.The high loss ratio characterizing natural catastrophe claims has also had an impact on reinsurers' shareholders' equity, which, set at 50.1 billion USD, has fallen by 37.6% in one year.
Read also | European reinsurers: technical indicators
Lloyd’s
In terms of gross premiums, Lloyd's is the world's 4th largest non-life market, with around a hundred active syndicates. Its highly diversified portfolio covers over 200 territories.
Unlike the portfolios of the major continental reinsurers, Swiss Re, Munich Re and Hannover Re, Lloyd's is highly volatile, due to the nature and origin of the business underwritten, much of which originates in the United States (natural catastrophes, cyber risks, etc.).
Lloyd's 2022 performance is mixed. Indeed, reinsurance placements, which account for 33% of the overall Lloyd's portfolio, are down by 4.14%, while direct business, which represents 77% of sales, is up 6.42%.
Despite a marked improvement in the combined reinsurance ratio to 91.8% (the lowest level in five years), Lloyd's sustained a net loss of 927 million USD. Shareholders' equity is also down, as ROE which stands at 1.9%.
Read also | Lloyd's main indicators: 2018-2022
American and Bermudan reinsurance markets
The underwriting results achieved by the US and Bermuda markets have improved overall in 2022 according to our data collected for 41 reinsurers in the region. Profitability has nonetheless deteriorated due to a sharp drop in financial results.
In 2022, gross premiums rose by 3.48%, from 120.4 billion USD in 2021 to 124.6 billion USD a year later. This growth reflects an increase in demand for coverage and improved pricing across all underwritten classes of business.
Despite the continuing high loss experience characterizing natural catastrophe claims in the United States, the loss ratio of 64.4% fell by 2.3% in 2022. The management expenses ratio follows the same trend, with an even more pronounced 5.3% decline. As a result, at 92.9%, the combined ratio closed the 2022 year with a gain of 3.2%, the best index reported by the market over the last five years.
Despite these good underwriting results, return on equity (ROE), which was 3.2% in 2021, fell to 0.2% at the end of 2022. Shareholders' equity was also down 12.6% over one year.
The market's strong underwriting performance is prompting many players to expand their portfolios and strengthen their positions in specific segments. The attraction of reinsurance is reflected in an increase in fund-raising, mergers & acquisitions and underwriting capacity in attractive-rate classes of business. The latest transactions in the market illustrate this trend:
- Capital raising by RenaissanceRe Holdings to support its subsidiaries, including several ones active in underwriting natural catastrophe risks.
- Acquisition of Validus Reinsurance and its subsidiaries by RenaissanceRe in May 2023. Transaction valued at 3 billion USD.
- Everest Group raised1.5 billion USD in May 2023 in an effort to strengthen shareholders' equity and support growth.
- Berkshire Hathaway increased its natural catastrophe underwriting capacity by 50% by the end of 2022. According to AM Best, the group currently has a total underwriting capacity of around 300 billion USD.
Asia-Pacific reinsurance market
The 16 reinsurers listed by Atlas in the Asia-Pacific region achieved mixed results in 2022. Almost all indicators are down in comparison with 2021. For instance, written premiums are down slightly, while natural catastrophe claims, particularly the floods in Australia and China, are causing the loss ratio to drop by 1.4 points. At the end of the day, the combined ratio remained above the 100% mark. Net income showed a similar downward trend, losing 22.85% compared with 2021.
Financial strength ratios are also down, notably the share capital and shareholders' equity. The year 2022 ended with a decline in overall market profitability, with a ROE of 8.5%, down by 17.47% over a year.
The decline in 2022 results compared with 2021, the year of post-Covid recovery, is accounted for by high natural catastrophe losses and the long uncertain economic environment. China and Australia, two of the region's leading economies, were among the last countries to lift all restrictions and limitations on the movement of people and goods during the pandemic. In the end, the pandemic weighed heavily on Chinese growth, the region's economic powerhouse.
On the insurance front, reinsurers in the Asia-Pacific region have exhibited great discipline during the 2023 renewals with the discontinuation of unprofitable programs and the significant increase in rates working in reinsurers' favor.
The 2024 renewal is a continuation of the 2023 renewal. The threat of natural catastrophes continues to weigh on the reinsurance demand, which remains strong, encouraging ceding companies to shield against balance sheet volatility.
