Despite the combined effects of almost £18bn of pandemic- and natural catastrophe-related losses and a compromised investment return, reinsurers reported positive earnings for the year and an increased capital base.
This is among the findings of Aon’s Reinsurance Aggregate report, which tracks the reported 2020 financial results of 23 of the world’s leading reinsurance firms.
COVID-19 dominated the headlines in 2020, creating unprecedented and unexpected challenges for reinsurers on both sides of the balance sheet.
The year also featured a record number of named storm formations in the Atlantic hurricane season, as well as a continued high frequency of losses from less well-modelled secondary perils.
Mike Van Slooten, head of business intelligence at Aon Reinsurance Solutions, commented: “Reinsurers generally performed well in very tough circumstances in 2020 and capital remains strong. Headline results have been poor in three of the last four years, but the underlying picture is now improving as recent adjustments to pricing and other terms and conditions feed through.”
COVID-19 is expected to continue to be a headwind to earnings in 2021 and uncertainty over the ultimate extent and distribution of related losses will be a factor in maintaining underwriting discipline, alongside deteriorating trends in casualty reserving, the impact of climate change and low interest rates.
