AON: ARA's 2020 GWP increased by 6% y-o-y to USD 294 billion

22 April 2021 —
Despite the combined effects of around USD 25 billion of pandemic and natural catastrophe related losses and a compromised investment return, Aon's Reinsurance Aggregate (ARA) of reinsurers was able to report positive earnings for the year and an increased capital base, aided by demonstrated access to new funding.

"COVID-19 dominated the headlines in 2020, creating unprecedented and unexpected challenges for reinsurers on both sides of the balance sheet. The year also featured a record number of named storm formations in the Atlantic hurricane season, as well as a continued high frequency of losses from less well modelled secondary perils, again focusing attention on the impact of climate change", showed the report.

Thus, total ARA's gross premiums written rose by 6% y-o-y to USD 294 billion, of which Property and casualty premiums rose by 7% to USD 223bn, split primary insurance USD 107 billion (+6%) and assumed reinsurance USD 116 billion (+7%). At the same time, Life and health reinsurance GPW stood at USD 54 billion, this segment generating additional COVID-19 related losses of USD 2.4 billion. In Property and casualty line of business, combined ratio stood at 103.4%, with COVID-19 losses of USD 14.0 billion contributing 8.0 percentage points (pp) and natural catastrophe losses of USD 8.7 billion adding another 5.0pp.

Other key highlights of the ARA's financial performance in 2020 were as follows:

  • The ordinary investment yield fell to a new low of 2.3%, driven by the capital market volatility associated with COVID-19 and the impact of emergency cuts in interest rates.
  • The capital market recovery subsequent to the first quarter was nevertheless sufficient to drive the ARA to an overall net profit of USD 5.4 billion, representing a return on equity of 2.3%.
  • Total capital rose by 6% to USD 270 billion, split equity USD 211 billion (+4%) and debt USD 59 billion (+16%).
  • The stock market value of the listed ARA companies at April 16, 2021 remained 6% below the level seen at the beginning of 2020.
Click here to download Aon's Reinsurance Aggregate Results for the Year to December 31, 2020.