World reinsurers carry out effectively in H1 2021

0
16

Reinsurers achieved exceptionally strong premium growth of 15% in the first half of the year. The weighted average of the reported combined ratio was 94.1%, which is very close to the figures reported for the first half of 2016 to 2019, reported Willis Re. Although unusually high natural catastrophe activity has been recorded in 2021, the rate is a dramatic improvement compared to the 104.1% affected by COVID-19 in the first half of 2020. The reported combined ratio also benefited from slightly higher reserve releases, which means a trend reversal declining publications since 2017.

The underlying combined ratio of reinsurers for half a year, excluding the development of the previous year and the normalization for natural catastrophe claims, has steadily improved since 2017, reported Willis Re. This improvement continued in the first half of the year, falling from 98.6% in the first half of 2020 to 98.4%. A lower expense ratio contributed to the improved combined ratio, with rapid premium growth more than offsetting rising costs.

Average ROE saw a strong rebound, driven by improved investment returns. The reported ROE recovered from -0.7% in the previous year to 13.9%, while the underlying ROE more than doubled to 6.3%. However, the underlying ROE is still below the industry’s cost of capital, Willis Re said.

Read next: Willis Re-Deal includes a two-year non-solicitation policy

“These results will encourage reinsurance providers,” said James Kent, global CEO of Willis Re. “The industry has endured several years of sub-par performance limited by the disastrous experience of COVID-19. The restructuring work carried out by reinsurers in recent years is now bearing fruit. Unfortunately, however, there was very strong premium growth in the first half of this year with combined ratios not much lower than in the softer parts of the cycle, so the underlying ROEs are still below the cost of capital. “