March 29th, 2018

What the Numbers Reveal about the Current Industry Status. Chapter 2: Insurer Profitability and Retrocession, Part II

Posted at 1:00 AM ET

How have 2017 losses and the last several years of declining rates impacted reinsurer profitability?  Has increasing prevalence of retrocessional reinsurance, now provided primarily by convergence capital providers, had an impact? Part II.

The Guy Carpenter Global Reinsurance Composite Third Quarter results provided hard data and context for recent industry performance. The Composite contains 20 reinsurance groups that are representative of the sector.

  • While ROAE fell to zero percent through Third Quarter 2017, the five-year weighted average ROAE including 2017 losses through Third Quarter was 8 percent, with the ten-year average at 8.1 percent. The ten-year average includes two of the three costliest catastrophe years on record.

In planning for what lies ahead in the current market, clients that present robust data and analytics and well developed, documented and executed loss mitigation programs will gain advantage in being able to position themselves favorably in renewal negotiations. These types of measures will support companies’ ability to attain risk transfer solutions that are customized and maximally efficient to fit their risk profiles.

Link to Chapter 1 >>

Link to Chapter 2, Part I >>

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