As reinsurance executives converge on Monte Carlo this week, a new report assesses the state of the reinsurance industry.Aon Benfield, the global reinsurance intermediary and capital advisor of Aon, yesterday released the September 2012 edition of its popular Reinsurance Market Outlook report, which provides a comprehensive analysis of the key variables affecting buyers of reinsurance as they approach their reinsurance renewals for the coming year.The report, entitled Record Reinsurance Performance and Capital, reveals that reinsurers are becoming more catastrophe risk centric and that the sources for managing reinsurer capital are becoming more diversified. The diversified sources of reinsurer capital are now beginning to influence the products reinsurers offer.The growing sources of capital supporting catastrophe risk are more interested in diversifying risk classes (such as insurance) as a consequence of low interest rates prevailing in the credit markets.The increasing property catastrophe centricity of reinsurers’ business plans is a result of insurers benefitting from a decade of declining frequency and very manageable severity increases in most non-catastrophe lines.Insurers have received less benefit from non-catastrophe reinsurance contracts than they anticipated and demand has fallen accordingly. Catastrophe reinsurance contracts continue to provide a strong capital management value proposition to insurers and have performed well over the past decade.“The declining frequency in non-catastrophe lines continues to erode the diversified business plan of reinsurers,” said Bryon Ehrhart, Chairman of Aon Benfield Analytics.“As reinsurers become more property-catastrophe centric they are aligning capital flows that are specifically interested in the dynamics of catastrophe risks and returns. We expect reinsurers will increasingly launch funds management programs over the next few years.”Reinsurer capital reached an all time high of $480 billion at the end of the first half of 2012 a five percent increase since year-end 2011. Reinsurance supply remains higher than demand in all global regions.The record level of reinsurance capital is partly a result of the relatively low catastrophe losses of the first half of 2012, which were estimated at approximately $14.7 billion.The Aon Benfield report says that loss experience in the second half of 2012 that is significantly above historical averages would affect the current capital situation, and would impact its market outlook.