Reinsurance: a dynamic market

After a slight downturn in 2008, the global reinsurance market is growing again in 2009. The sector has generated premiums worth 190 billion USD, 123 billion USD of which in non-life reinsurance, a rise of 5.5% compared to 2008.

If the world's reinsurance market is currently prospering, it is thanks to:

• substantial 2009 profits,
• a series of mergers and acquisitions between 2006 and 2009,
• good resistance to the economic crisis,
• a return to acceptable levels of shareholders' equity and of capitalization,
• a gradual resumption of growth,
• net combined ratios below 95% for the fourth consecutive year.

Reinsurance confirms its ability to overcome crises without jeopardizing its engagements.

Loss experience on the decrease

The sound health of reinsurance in 2009 can also be accounted for by the low loss experience of natural and technical catastrophe risks.

In 2009, 288 major events were reported throughout the world: 133 natural catastrophes and 155 technical disasters. These losses have generated 62 billion USD in economic damage, 26 billion USD of which, or 42%, sustained by insurers, compared to 52.5 billion USD a year earlier.

The year's most costly event was storm Klaus which affected Spain and France particularly. Klaus has cost 3.4 billion USD. All of the natural catastrophes in North America amounted to 12.7 billion USD.

Thanks to this low loss experience, reinsurers have exhibited high levels of profitability in 2009. Their combined ratio in non-life reinsurance is well below 100% (92% for the overall non-life market).

Moreover, according to Standard & Poor's, the top world's 40 companies have managed to recover all of their shareholders' equity which is increased by 26% after a decline of 18% in 2008.

Results of the top five reinsurers in 2009 (consolidated figures)

in billions USD

	Written premiums1	Net underwritten premiums	Combined ratios	Shareholder's equity	Ratings2
					S & P	AM Best
Munich Re	58	32.5	93.1%	31.9	AA-	A+
Swiss Re	23.7	23	88.3%	25.2	A+	A
Hannover Re	14.7	13.6	96.6%	5.3	AA-	A
Berkshire Hathaway	27.8	12.5	-	46.8	AA+	A++
Scor	9.1	8.3	96.8%	5.5	A	A

¹ Earned premiums for Swiss Re; for Berkshire Hathaway, it is the turnover of the group's insurance and reinsurance companies. ² Ratings as at October 18, 2010, according to the agencies websites Source: Reinsurers' annual reports of 2009

Breakdown of reinsurance premiums

Especially buoyant, the European market is holding the upper hand with 54% of premiums accepted and 37% of ceded premiums. North America is second with 45% of premiums of premiums accepted and 42% of ceded premiums. Asia exports 10% of its insurance premiums and accepts only 1% of the world's reinsurance premiums.

The sector is still characterized by a high concentration. The top five reinsurers, which have almost tripled their shares since 1980, control about 50% of the market shares.

European markets remain very active and continue to top the world's reinsurers list.

However, the European and American players' influence has slightly diminished while that of the Bermudan and Asian reinsurers picked up.

The Bermudans have doubled their market share from 4% to 8% over the last ten years. The Pacific Asia region rose from 8% to 10% during the same period.

The main reinsurance markets in 2009

in billions USD

	Markets	Net premiums	Capital*	Combined ratio %
1	Germany	40.3	53.1	97.7
2	United States	31.6	59.7	102.3
3	Switzerland	13.6	27.4	91.8
4	Bermuda	13.2	33.3	79.3
5	United Kingdom	8.7	23.8	85.6
6	France	6.5	11.2	85.5
7	Ireland	4	4.4	98.6
Total 40 groups		147.7	172.3	94.8

* Only professional reinsurers S&P Source: Global Reinsurance Highlights 2009

Return on equity (ROE) of the main reinsurers: 2008-2009

	2009	2008
Munich Re	11%	6.4%
Swiss Re	2.3%	-3.3%
Hannover Re	22.4%	-4.1%
Scor	10.2%	9%
RGA	12.6%	6.1%
Transatlantic	13.2%	3.1%
Everest Re	14.6%	-0.4%
Partner Re	27.8%	0.3%
XL	3.1%	-37.4%

Sources: The Association of the French reinsurance professionals (APREF) and the French federation of insurance companies (FFSA)