Global reinsurer capital increased by almost 4 percent through year end 2021 to $675 billion, driven by growth in traditional capital, slightly offset by a decline in alternative capital, according Broker Son.
The year-end 2021 figure from Aon represents growth of more than 2 percentfrom the $660 billion the firm recorded at the mid-year, and is up $25 billion from the end of 2020.
According to Aon, traditional capital increased 4.1 percent in 2021 to a new high of $579 billion, while alternative capital reached $96 billion, which is a slight decline from the end of June 2021 but above the $95 billion seen at year end 2020.
The insurance and reinsurance broker attributes the 4.1 percent growth mainly to retained earnings, as most reinsurance firms produced profitable results in 2021, despite the impacts of the pandemic and above-average losses from natural catastrophes.
“In contrast to 2021, issuances of new equity were modest and there were not any noteworthy start-ups leading up to January renewals. Nevertheless, retained earnings were sufficient to boost traditional equity by $23 billion to $579 billion,” said Aon.
Most companies showed growth, with strong stock markets driving some sizeable increases with above average allocations to equities. The reductions at IRB Brasil, Lancashire, RenRe and Conduit coincided with overall losses reported for the year, while net income of $1.4 billion at Swiss Re was outweighed by a combination of dividend payments, unrealized losses on bonds and adverse foreign exchange movements,” the firm added.