Aon: ARA reinsurers net profit went up by 44% y-o-y

10 September 2019 — team
Aon published its half-year ARA (Aon's Reinsurance Aggregate) report on the global reinsurance market. The report shows strong earnings among the top reinsurance companies, driven by premium growth, a small incidence of major losses and improved investment results.

Below you can find the executive summary of the report. The in-depth analysis of the presented figures can be found here - 1H2019 Aon's Reinsurance Aggregate report.

  • The ARA posted strong earnings for the first half of 2019, driven by premium growth, benign major loss experience and capital market conditions that were conducive to investment returns.
  • Total equity rose by USD 17 billion (+9%) to USD 201 billion at June 30, 2019, net of a capital return to investors of USD 7.0 billion.
  • Total gross premiums written rose by 5% to USD 147 billion. Property and casualty (P&C) premiums climbed by USD 8 billion (+8%) to USD 108 billion, while other premiums were flat at USD 39 billion.
  • The P&C reinsurance cession ratio was stable at an elevated level of 18.5%, partly reflecting the increasing amounts of peak risk now being transferred to the capital markets.
  • P&C net premiums written rose by 9% to USD 89 billion, while net premiums earned rose by 5% to USD 79 billion.
  • The accident year combined ratio was unchanged at 95.7%. The calendar year combined ratio deteriorated by 2.0pp to 96.2%, driven almost entirely driven by additions to reserves for prior year catastrophe losses (notably Typhoon Jebi).
  • P&C underwriting profit fell by a third to USD 3.0 billion.
  • Ordinary investment income rose by 7% to USD 11.7 billion, influenced by the impact of interest rate rises in the US and UK markets during 2018.
  • Capital gains increased substantially to USD 7.1 billion, reflecting unrealized gains on bond and equity portfolios.
  • Pre-tax profit stood at USD 15.7 billion, an increase of 42% relative to the first half of 2018. Net income rose by USD 3.9 billion (+44%) to USD 13.0 billion, representing a relatively strong annualized return on equity of 13.7%. This result was significantly ahead of the cost of equity.

"The ARA" is formed by 23 companies, considered to underwrite around 50% of the world's non-life reinsurance premiums, and more than half of life reinsurance premiums.

ARA companies for 1H2019 were: Alleghany, Arch, Argo, Aspen, AXIS, Beazley, Everest Re, Fairfax, Hannover Re, Hiscox, Lancashire, Mapfre, Markel, Munich Re, Partner Re, QBE, Qatar Insurance, RenRe, SCOR, Sirius, Swiss Re, Third Point Re and W.R. Berkley.

You can read the full 1H2019 Aon's Reinsurance Aggregate report here.

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