Reinsurers have not had it easy in recent years. For two years in a row,
natural catastrophes challenged reinsurers with losses totaling more than $200 billion in 2017 and 2018, combined. Yet, despite those challenges, things are looking up slightly for the segment. According to AM Best's Market Segment Report, "Global Reinsurance: Fighting the Last War," non-life reinsurance pricing is gaining more favorable momentum, even in an increasingly competitive market environment. In fact, a more stable non-life pricing environment; continued alignment of traditional and third-party capital; better alignment of risk and return; and other positive factors prompted AM Best to upgrade its outlook for the global reinsurance segment from "negative" to "stable" in December 2018. A stable marketplace has benefited reinsurers' business — the year-over-year premium growth among AM Best's annual Top 50 World's largest Reinsurance Groups increased from $262.7 billion in 2017 to $263.0 billion in 2018. While the gain is minimal, it's important to note that a portion of 2017's market growth was contributed from reinstatement premiums resulting from the Harvey, Irma, and Maria hurricane losses, and a transaction between Berkshire Hathaway and AIG The average combined ratio for the top 50 reinsurers did significantly improve in 2018 (100.9) from 2017 (109.1); however, the industry's largest reinsurers continue to house disproportionately sizable amounts of risk, says AM Best, which is evidenced by the top 10 reinsurers accounting for 68% of the gross premium written by all the reinsurers on the list in 2018.
To view the top 20 global reinsurers from AM Best's Top 50 World's largest Reinsurance Groups, click through the slideshow above. Many groups included in AM Best's ranking not only have diverse product offerings but they also maintain a very strong geographic spread of risk and cater to a range of different markets, AM Best explains. As such, reinsurers are expected to continue their pursuit of
new growth opportunities. For example, Latin America, where economies have met or exceeded market expectations, has served as an emerging market for reinsurance and other segments. Other geographies, such as the Middle East and North Africa, are presenting unique challenges to some and opportunities to others, says AM Best. And for reinsurers taking a more long-term approach, areas such as Sub-Saharan Africa can provide
interesting opportunities for growth and diversification.
Methodology
AM Best's annual ranking of the leading global reinsurers is determined by capturing only third-party business, excluding affiliated or intergroup reinsurance, and eliminating compulsory business. Additionally, if a company's gross premium written for reinsurance is equal to or greater than 75% of its entire GPW, then the entire GPW figure is counted as reinsurance premium for its ranking. On the flip side, if a company's GPW consists of less than 75% reinsurance premiums, then only the reinsurance premiums are counted. Finally, AM Best converts currency to U.S. dollars using the foreign exchange rate that coincided with the date of the financial statements. Companies are then ranked by unaffiliated gross premium written in 2018. To read AM Best's full report, "Global Reinsurance: Fighting the Last War," visit the AM Best website. Related: