Thought Leadership - Reinsurance

Homeowners ROE Update
The prospective return on equity (ROE) for the homeowners line of insurance has declined in the last twelve months from 6.5 percent to 6.1 percent. This annual review by Aon Benfield Analytics of actual rate changes and supporting actuarial information in rate filings available as of July, 2009 confirms that the prospective ROE is now far less than the increased cost of insurer capital resulting from the global credit and liquidity crisis. The prospective ROE is based on estimated capital requirements sufficient for an A.M. Best "A" rating, net of expected reinsurance benefit estimated by Aon Benfield.
Oct-09Analytics

Lloyd's Update - Evolution
Lloyd’s pro forma capital increased by 13%, to GBP16bn, in the six months to June 30, 2009, and 30% year on year. Gross premiums written increased by 35% from 1H 2008, to GBP13.5bn, largely due to currency movements and firmer pricing in some of the key Lloyd’s markets. While the investment approach of Lloyd’s remains conservative, it benefited from the improved investment market in the second quarter of the year. The period has seen a continued effort by Lloyd’s to realize its ambition to be the platform of choice. The resolution of the Equitas deal, coupled with the affirmation of Lloyd’s ratings by A.M. Best, Standard & Poor’s and Fitch, are indicative of the progress Lloyd’s has made since its “near death” experience of the late 1980s.
Oct-09Research

Insurance Risk Study - Modeling the Global Market
The Insurance Risk Study – Modeling the Global Market provides clients with an objective and data-driven set of underwriting volatility benchmarks, such as the systemic risk of each line of business, and loss ratio correlations between lines of business and between countries. The fourth edition of the Study quantifies these benchmarks for 26 countries that together comprise more than 85 percent of global premium.
Sept-09Analytics

Insurance Linked Securities - Adapting to an Evolving Market
Aon Benfield Securities’ Annual ILS Review highlights the latest activities and trends in the Insurance-Linked Securities market, and offers a distinctive analysis of this dynamic sector. As with most financial markets, the ILS market has been affected in many ways by the recent global economic disruption. The ILS Review addresses the impact of that disruption, and assesses the ILS market in that context.
Sept-09Aon Benfield Securities

Reinsurance Market Outlook - Resilient Without Assistance
Reinsurance Market Outlook – Resilient Without Assistance reviews trends in 2009 both within the industry and in the context of the global economy as a whole, and looks ahead to what 2010 may hold for reinsurers. The report highlights that the reinsurance market proved resilient in the depths of the credit and liquidity crisis; instead of shrinking, requiring government assistance and cancelling commitments, it provided critical liquidity to cedents.
Sept-09Analytics

The Aon Benfield Aggregate - 1H 2009 - Glass Half Full
The Aon Benfield Aggregate (ABA) is a quarterly report that provides a representative perspective on market trends, as well as the quarterly results of the leading global reinsurers. The analysis looks at 24 public reinsurers (the “Aggregate”).
Sept-09Research

Hazard & Risk Science Review 2009
The Hazard & Risk Science Review 2009 is the sixth edition of this unique annual publication. The Review, co-sponsored by Aon Benfield and PartnerRe, assists in bridging the gap between re/insurance and academia by providing a synopsis of key research papers deemed most relevant to the industry.
 Sept-09Aon Benfield UCL Hazard Research Centre

Reinsurance Market Update - July 1, 2009
The Aon Benfield July Reinsurance Market Update report examines the trends experienced in various lines and territories at the July 1 renewals. The report highlights that while the U.S. reinsurance market for hurricane-exposed programs continued to harden, renewals of catastrophe-exposed programs outside of the U.S. remained firm and were influenced by regional loss experience and reinsurer competition to participate in regional programs.
Jul-09Analytics

Event Recap Report: Central European Floods, July 1, 2009
A significant rain event that began on 19 June 2009 brought summer flooding across central areas of Europe, causing the largest flood event in the region since 2002. The Czech Republic, Austria and Poland were amongst the hardest-hit countries. Southern Germany, Hungary and Slovakia have also declared flood alerts.
Jul-09Impact Forecasting

Regulatory Capital - Requirements on the Rise
Regulatory Capital – Requirements on the Rise takes a look at the impact of the credit and liquidity crisis on worldwide regulatory practices. Property and casualty insurers worldwide, on average, saw their equity capital decline between 25 and 35 percent during 2008 and early 2009. This level of capital erosion substantially reduced the excess capital cushion in the industry. We expect to see significant changes in both the way the regulators evaluate the industry, as well as the levels of capital they expect their companies to hold.
June-09Analytics

Aon Benfield Aggregate - 1Q 2009 - Even Keel
The Aon Benfield Aggregate – 1Q 2009 Even Keel, reveals that, following an 18 percent reduction in 2008, shareholders' funds for the analysis group fell by just one percent during the first quarter of the year to USD124bn. Meanwhile, compared to Q1 2008, net investment income for the group declined by 25 percent to USD6bn, across an investment portfolio that was 16 percent lower at USD663bn.
Jun-09Research

Lloyd's Update: Capital Additions
Pro forma capital of Lloyd's increased by 5% in 2008 to GBP14.2bn while 1 January 2009 stamp capacity increased by 3% to GBP16.6bn.1 New entrants and capital raising from existing syndicates supported the rising trend with the prospect of firmer pricing in some areas in addition to the Lloyd's A+ rating (Fitch and Standard & Poor's) and the unique distribution capabilities proving attractive.
Jun-09Research

Reinsurance Market Update - June 1 - Florida
"Catastrophe reinsurance renewal pricing covering risks in Florida at June 1 increased by 10 to 15 percent. The June 1 renewal date is most significant in the United States as many reinsurance programs that cover significant Florida residential exposures are structured around the substantial loss reimbursements that are projected by the State of Florida through its Florida Hurricane Catastrophe Fund (FHCF). The increases were at the mid to low end of the ranges we had estimated in our April 1 report. The less severe increases occurred for three reasons: (a) the FHCF dramatically increased its estimates of its bonding capacity due to its belief that the municipal bond markets had substantially improved and that it may now be able to fund all of its projected mandatory and optional capacity; (b) insurers' continued investment related challenges in the first quarter of 2009 caused property catastrophe risk reduction strategies to be prioritized above paying substantially higher prices for reinsurance coverage; and (c) reinsurer capacity was generally adequate for the demand that did come to the market. Reinsurer capacity was eased slightly by the decision of Citizens, Florida's state controlled insurer, to not renew its nearly $500 million private reinsurance program because its legislatively suppressed rates would not allow it to pay for both the increased cost of its FHCF reimbursements and a higher cost for its private reinsurance program. Our expectation for United States July 1 are published below and other global regions remain as projected in our report on January 1st renewals and 2009 outlook."
Jun-09Analytics

Reinsurance Market Outlook: April 1 2009 Update
This April 1, 2009 Reinsurance Market Outlook Update shows firming property catastrophe rates across most regions as the market completes April renewals. Japan's catastrophe risks dominate the renewals period, and a strong yen is partly responsible for pressure on capacity for Japanese programs and consequent rate rises. Additionally, continued hardening for property catastrophe renewals is expected in June and July where Florida risk is dominant.
Apr-09Analytics

Aon Benfield Aggregate - FY 2008 - Reinsurer Capital Maintenance
This new results commentary is based on the Aon Benfield Aggregate (ABA) which currently comprises 24 companies with a specialization in reinsurance and/or a significant volume of premium income related to reinsurance activities.
Apr-09Research

Annual Global Climate and Catastrophe Report: 2008
This paper provides a detailed overview of catastrophes in 2008. The May earthquake in China and September's Hurricane Ike received the most media coverage; however, the credit and liquidity crisis placed more capital stress on insurers and reinsurers. The paper also discusses the current situation in California regarding earthquake insurance.
Jan-09Analytics

Event Recap Report: Windstorm Klaus: Jan 23 - 24 2009
Windstorm Klaus affected southern France and northern Spain in January, 2009 and is attributed to more than 20 deaths. This report overviews the track and winds experienced during Klaus, a damage summary and discussion of initial vendor model loss estimates, and meteorological insights into the event.
Jan-09Analytics

Reinsurance Market Outlook: Global Prices Firm as Reinsurers Maintain Core Capital Amid Credit Crisis
This January 2009 report discusses firming global reinsurance prices. Because U.S. hurricane and earthquake exposures drive capital requirements for most reinsurers, Aon Benfield forecasted that the impact of the credit crisis would primarily affect pricing, capacity and cedent retention.
Jan-09Analytics

Insurance Linked Securities: Innovation and Investor Demand Set the Stage for Continued Growth
This review offers a variety of insights about the insurance-linked securities market. It also discusses our Cat Bond Indices, indemnity structures, investor demand for insurance-linked securities, the contingent capital market, and the market's latest innovations in futures and derivative tools.
Jan-09Investment Banking Group