Reinsurance Market Outlook: positive with record capital and mild demand growth - Aon Benfield
MONTE CARLO, Sept. 9, 2012 /PRNewswire/ -- Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc (NYSE: AON), today releases the September 2012 edition of its popular Reinsurance Market Outlook report, which provides a comprehensive analysis of the key variables affecting buyers of reinsurance as they approach their reinsurance renewals for the coming year.
The report, entitled Record Reinsurance Performance and Capital, reveals that reinsurers are becoming more catastrophe risk centric and that the sources for managing reinsurer capital are becoming more diversified. The diversified sources of reinsurer capital are now beginning to influence the product offerings of reinsurers to cedents. The growing sources of capital supporting catastrophe risk are more interested in diversifying risk classes (such as insurance) as a consequence of low interest rates prevailing in the credit markets.
The increasing property catastrophe centricity of reinsurers' business plans is a result of insurers benefitting from a decade of declining frequency and very manageable severity increases in most non-catastrophe lines. Insurers have received less benefit from non-catastrophe reinsurance contracts than they anticipated and demand has fallen accordingly. Catastrophe reinsurance contracts continue to provide a strong capital management value proposition to insurers and have performed well over the past decade.
Bryon Ehrhart, Chairman of Aon Benfield Analytics, said: "The declining frequency in non-catastrophe lines continues to erode the diversified business plan of reinsurers. As reinsurers become more property-catastrophe centric they are aligning capital flows that are specifically interested in the dynamics of catastrophe risks and returns. We expect reinsurers will increasingly launch funds management programs over the next few years."
Reinsurer capital reached an all time high of USD480 billion at the end of the first half of 2012 – a five percent increase since year end 2011. Reinsurance supply remains higher than demand in all global regions. The record level of reinsurance capital is partly a result of the relatively low catastrophe losses of the first half of 2012, which were estimated at approximately USD14.7 billion. Loss experience in the second half of 2012 that is significantly above historical averages would affect the current capital situation, and would impact Aon Benfield's market outlook.
To view the full September 2012 Reinsurance Market Outlook report, please follow the link below:
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.
Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.
SOURCE Aon Benfield