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.
Reinsurance in 2009 is:
- A turnover of 190 billion USD, an increase of 5.5% compared to 2008
- Two major players: Europe and North America which both account for 87% of the market shares
- The top five reinsurers hold 47% of the world's market
- The market share of the 10 leading reinsurers has tripled since 1980
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 |
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 | |
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% |