In its latest global reinsurance market report, Willis Re says reinsurers retained more net income than usual, returning less than half to shareholders, to drive growth in the current stronger rating environment.
Willis Re said returns on equity (ROEs) had improved from negative territory last year, but underlying ROEs are still below the cost of capital.
Premium growth at reinsurance firms was 15 percent higher in H1 2021, boosted by price increases at both primary and reinsurance level, as well as higher exposure as the global economy rebounds, says Willis Re.
“The 15 percent growth rate is the strongest we have seen at the half-year stage since we began producing this analysis in 2014,” it adds.
Global reinsurers recorded a half-year combined ratio of 94.1percent, compared to 104.5 percent in the first half of 2020, when Covid-19 hit. Willis Re says the combined ratio “closely matches” half-years for 2016 to 2019 and was helped by higher levels of reserve releases.
James Kent, global CEO at Willis Re, said: “The industry has endured several years of below-par performance, capped by the calamitous experience of Covid-19. Now the remedial work reinsurers have undertaken over the past several years is bearing fruit.”