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Global reinsurance capital hits record levels - Aon
September 4, 2012 / 2:15 PM / in 5 years

Global reinsurance capital hits record levels - Aon

* New high mark of $480 bln at June 30

* New capital accounts for 20 pct of gains

* Valuations rising closer to book value

Sept 4 (Reuters) - Reinsurers worldwide had $480 billion in capital available at the end of June, up 5 percent from the end of 2011 as the industry posted smaller disaster losses and charged higher prices in some areas, brokerage Aon Benfield said on Tuesday.

The figure represents a record for the Aon Benfield Aggregate, the firm’s semi-annual review of market capacity.

Many reinsurance companies expected sharp, across-the-board price increases this year after 2011’s record-breaking losses in excess of $100 billion, but an influx of capital has kept a lid on pricing for the most part.

Aon Benfield, a unit of Aon Plc and the world’s largest reinsurance broker, said newly entered capital represented about 20 percent of the total increase this year.

A number of new companies backed by hedge funds have entered the market in recent months. Sales of catastrophe bonds, which let insurers transfer risk to capital markets, have also hit new records.

Key components of the increase, Aon said, were higher premiums related to price increases for certain kinds of coverage in parts of the world affected by disasters last year, as well as underwriting profits as disaster losses declined.

One positive sign for reinsurers in the report is that valuations are rising. They have been depressed since the financial crisis, with many companies trading at more than a 20 percent discount to book value.

But in most cases they are up this year, as the industry average creeps closer to book value and a third of the companies in the aggregate exceed it.

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