Global reinsurance capital, profits, and ROE on the rise in H1: Willis Re
Global reinsurers performed well in the first half of 2021, with a further expansion of their capital bases and strong headline underwriting results and ROEs. Underlying ROEs, while less strong, were nonetheless noticeably improved, according to the latest Reinsurance Market Report from Willis Re, the reinsurance business of leading global advisory, broking and solutions company Willis Towers Watson (NASDAQ: WLTW).
Total capital dedicated to the global reinsurance industry measured USD 688 billion after the first six months of 2021, reflecting a 4% increase from 31 December 2020.1 The rise was driven primarily by strong net income. To fuel organic growth in the positive rating environment, reinsurers typically retained more income than has been usual in recent years.
Reinsurers together achieved exceptionally strong premium growth of 15% during H1 2021. Their weighted average reported combined ratio was 94.1%, which closely matches the figures reported for the 2016 to 2019 half years. Despite abnormally heavy natural catastrophe activity so far this year, the ratio marks a dramatic improvement from the COVID-impacted 104.1% in H1 2020. Reported combined ratios also benefitted from slightly higher levels of reserve releases, reversing the trend of declining releases seen since 2017.
The reinsurers’ underlying half-year combined ratio, excluding prior year development, and normalising for natural catastrophe losses, has improved steadily since 2017. This continued in H1 2021, falling from 98.6% in H1 2020 to 98.4%. A lower expense ratio supported the improved combined ratios, as rapid premium growth more than offset rising costs.
The average ROE also rebounded strongly, assisted by improved investment returns. The reported ROE recovered from last year’s minus 0.7% to reach 13.9%, while the underlying ROE more than doubled to reach 6.3%. Nevertheless, the underlying ROE still remains below the industry’s cost of capital.
“Reinsurance providers will be heartened by these results. The industry has endured several years of below-par performance, capped by the calamitous experience of COVID-19. Now the remedial work reinsurers have undertaken over the past several years is bearing fruit.”James Kent | Global CEO, Willis Re
James Kent, Global CEO, Willis Re, said: “Reinsurance providers will be heartened by these results. The industry has endured several years of below-par performance, capped by the calamitous experience of COVID-19. Now the remedial work reinsurers have undertaken over the past several years is bearing fruit.
“Unfortunately, though, very strong premium growth in the first half of this year was achieved against combined ratios which are not much lower than during the softer parts of the cycle, therefore leaving underlying ROEs still languishing below the cost of capital.”
Download the full report: The Willis Re Reinsurance Market Report is a biannual publication providing in-depth analysis of the size and performance of the reinsurance market. Analysis is based on the Willis Reinsurance Index group of companies. In 2021 the Index includes 43 companies from across the globe.
AXIS Re Hires Willis Re’s Bangs as Head of Japan
AXIS Re, the reinsurance business segment of AXIS Capital Holdings Ltd., announced the hiring of David Bangs as head of Japan.
Bangs joins AXIS Re from Willis Re Singapore where he served as executive director. Prior to that, he held the role of Japan Representative at Wills Re Tokyo. Bangs will be based in Singapore.
“David brings broad experience in the Japanese market,” said Les Loh, AXIS Re President Asia Pacific.
“Under his leadership, we look forward to further extending our expertise to our clients in Japan as the market continues to evolve.”
Willis Re names James Moss as co-head of Specialty Casualty business
Willis Re, the reinsurance broking arm of Willis Towers Watson (WTW), has announced the appointment of James Moss as co-head of its Specialty Casualty practice.
Moss joins from Lockton Re, where he was a partner and head of International P&C reinsurance. Before joining Lockton in 2012, he was a senior vice president in Guy Carpenter’s London market casualty team. He began his career at R K Carvill & Co.
He will work in tandem with Chirag Shah to lead Willis Re Specialty’s Casualty strategy in London and he will report to Andy Law, Managing Director and Head of Specialty P&C.
“I am delighted to be joining Willis Re and look forward to working with their market leading Casualty team, offering clients fresh thinking and true innovation in an evolving risk landscape,” said Moss.
Shah also commented: “James brings a wealth of Casualty expertise to our team. His leadership will only strengthen our ability to deliver thoughtful insight and value to our clients and on behalf of our Casualty team, I’m excited to welcome him to Willis Re.”
“We are delighted to welcome a leading market figure like James to the team,” added Graeme Moore, Chief Executive Officer at Willis Re Global Specialty.
“His extensive experience will be an invaluable asset as we continue to enhance our offering in this sector. His appointment is a testament to Willis Re Global Specialty’s ability to attract the best talent in the industry.”