Reinsurance sector improves CR to 84.5% in H1 2024: Gallagher Re
Reported combined ratios across the reinsurance sector improved to 84.5 percent during the first half of 2024, according to Gallagher Re’s latest Reinsurance Market Report.
- Reinsurance combined ratios improve 2.5 pts YoY to 84.5%
- Percentage of nat cat insured losses covered by reinsurers falls to 5.8% from 7.7%
- Industry earns 7% margin on cost of capital on underlying RoE basis in H1
- Global dedicated industry capital rises 5.4% to new high of $766bn
This represented a year-on-year improvement of 2.5 percentage points and was the strongest combined ratio recorded by the sector since the report’s launch in 2014.
Gallagher Re said the improvement was attributable to a reduction in natural catastrophe losses and a lower ex-cat accident year loss ratio.
The broker said reinsurers reduced their portion of global insured natural catastrophe losses – estimated at $61bn for the first half of the year – from 7.7 percent in H1 2023 to 5.8 percent in H1 2024.
This reduction reflected higher attachment points with natural catastrophe losses dominated by “secondary perils” typically retained by primary carriers, such as severe convective storms and floods.
The bulk of the aggregate combined ratio reduction was driven by Munich Re, which saw a 6 point improvement to 77.5 percent.
SiriusPoint Re, Markel and Swiss Re were the only companies reporting meaningful combined ratio deterioration of 2 percentage points or more. All companies that disclose combined ratios reported a result below 100 percent for the metric during the first half of 2024.
Gallagher Re said the improved combined ratios helped global reinsurers deliver a strong set of results for the half year, with improvements to underwriting profitability helping drive exceptional RoEs and the continued building of capital.
The broker said the reinsurance industry’s underlying RoE improved again markedly, remaining well above the industry’s cost of capital.
Gallagher Re said global dedicated reinsurance capital rose 5.4 percent to $766bn in the first half of the year, driven in part by an increase in alternative capital.
RoE stabilised at 19.6 percent for the half year, with the industry earnings a 7 percent margin over the cost of capital on an underlying RoE basis. Expansion was driven primarily by rate increases by volume growth, which was limited due to shifts in business mix and rising attachment points.
The sector’s underlying RoE rose from 13.6 percent in H1 203 to 15.5 percent in H1 2024.