Aon: 2016 saw return of reinsurance capital growth

Aon's latest reinsurance market outlook claims that 2016 saw the return of reinsurance capital growth, increasing by 5.3 percent to $595 billion for the nine months ending September 30, 2016, compared to a decline of 2 percent for the full year 2015.

This was largely driven by solid reinsurer earning and unrealised gains on bond portfolios resulting from declines in interest rates.

The average combined ratio among the twenty Aon Benfield Aggregate companies reporting nine month results was 90.9 percent, up from 88.4 percent in the same period of the prior year.

This figure is calculation that is a broad measure of capital available for insurers to trade with and includes both traditional and alternative forms of reinsurer capital.

For the nine-month period, traditional reinsurance capital increased 4.7 percent to $517 billion, however alternative capital increased by only 9.6 percent, the smallest growth it has reported in five years.

Aon suggested that overall demand for reinsurance has increased, but growth has been isolated to few regions and lines of business.

While new lines such as mortgage and cyber continue to grow, slow insurance growth in many regions with low primary insurance penetration saw stable reinsurance demand.

Catastrophe losses for 2016 totalled $53 billion, slightly above the 10-year average, for the first time since 2012.

In spite of this, Aon suggested that uninsured losses continue to highlight the protection gap in coverage for emerging markets.