Reinsurance market set to double by 2030, report says
Six Bermuda reinsurance groups are among the top 20 global franchises listed by market research firm, Skyquest Technology in its latest report on the reinsurance market.
The report analysed the drivers, restraints, market dynamics, trends, opportunities and challenges of the market, together with the competitive landscape that is expected to shape its future growth trajectory.
The report valued the global reinsurance market at nearly half a trillion dollars ($498.7 billion) in 2021 and said it is poised to double from $552.56 billion in 2022 to $1,255.15 billion by 2030, growing at a compound annual growth rate of 10.8 per cent in the forecast period (2023-2030).
A report summary listed among the reinsurance market top 20 companies: Everest Re at 9, PartnerRe (10), TransRe (11), Arch Capital Group (12), RenaissanceRe (13) and Axis Capital Holdings (17).
It outlined the strong premium growth and underwriting profitability of the 2022 global reinsurance sector, but highlighted the continuing industry trend of lower return on equity.
The 2022 year was also marked by capital levels pulled lower owing to a fall in the market value of bonds (precipitated by rising interest rates and widening credit spreads) and equities.
The report said: “Nevertheless, the global reinsurance industry’s financial strength remains healthy with an improving trend of underlying profitability.
“Over the ten years from 2012 through 2021, reinsurers’ average annual total shareholder return of 14.5 per cent eclipsed that of all sectors of primary insurance (property and casualty, multiline, and life and health). In recent years, the impact of natural catastrophes has put pressure on reinsurers’ TSR.
“Even so, their average annual TSR of 8.1 per cent over the five years from 2017 through 2021 still surpassed that of all primary insurance sectors except for property and casualty.
“Demand for catastrophe bonds currently outpaces supply, as insurers and reinsurers increasingly turn to alternative capital markets to supplement traditional reinsurance and maximise placements in a challenging environment.
“Munich Re and Swiss Re accounted for 24.3 per cent of the top 50 reinsurers’ gross written premiums in 2021, down slightly from 25.6 per cent in 2020, likely driven by the depreciation of the euro.
“Despite notable catastrophe losses in 2021, many stemming from secondary perils, the top 50 companies on average posted a combined ratio under 100 for the first time in the last 5 years.
“The average combined ratio of the top ten companies was 99.2, significantly better than the 104.9 in 2020.”
SkyQuest Technology is a Massachusetts-based growth consulting firm providing market intelligence, commercialisation and technology services to a global client base.