Net income recorded by the 19 companies that together underwrite more than 50 per cent of the world’s life and non-life reinsurance premiums fell 56 per cent in 2022, a report by global professional services firm Aon has revealed.

The drop to $9.6 billion represented a return on equity of 5.2 per cent, Aon’s Reinsurance Aggregate report said.

The 19 companies included in the study are Arch, Axis, Beazley, Everest Re, Fairfax, Hannover Re, Hiscox, Lancashire, Mapfre, Markel, Munich Re, PartnerRe, QBE, Qatar Insurance, RenRe, Scor, Swiss Re, SiriusPoint and WR Berkley.

Alleghany, Argo and Aspen have been dropped from coverage, Aon said.

Other highlights of the report:

• Property & casualty gross premiums written rose by nine per cent to $272 billion

• Underwriting profit of $8 billion represented a net combined ratio of 96.2 per cent

• Total investment return fell by 61 per cent to $12.3 billion

• Total shareholders’ equity fell by 21 per cent to $157 billion at year end

Aon said recent renewals have highlighted constraints in reinsurer underwriting appetites, particularly for property catastrophe business.

The report reveals that the ARA group posted resilient underwriting results in 2022, despite the impact of Hurricane Ian.

However, asset values were eroded by sharply rising interest rates and falling stock markets, resulting in weak overall earnings and reductions in reported equity.

Mike Van Slooten, Aon’s head of business intelligence, said: “Reinsurers’ underlying underwriting results were generally strong in 2022 despite the unusual amount of volatility in the capital markets.

“Significant unrealised investment losses on bond portfolios weighed heavily on overall earnings and reported capital positions. However, these losses are viewed as temporary and largely non-economic in nature.”

He added: “Looking ahead, renewal outcomes in 2023 and the tailwind of higher interest rates have improved the outlook for reinsurers and we expect new capital inflows to begin relieving current capacity constraints when earnings delivery is confirmed in reported results.”

Sherif Zakhary, CEO, Aon’s Strategy and Technology Group, added: “While capital is a complex issue and businesses are not affected equally, it is more about how you tell your risk/reward story and focusing your access to capital on delivering a stable outlook rather than on an episodic one, which is driven by the circumstances of the current cycle.”