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Aon Benfield Credit Risk Report Confirms Superior Stability of Reinsurance Industry

Posted on 11 Sep 2012 by Neilson

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AonAon Benfield, the global reinsurance intermediary and capital advisor of Aon plc, on Monday launched a new report that assesses the creditworthiness of the global reinsurance industry through a series of comprehensive analytical techniques.

Credit Risk of Property Catastrophe Reinsurers examines the credit quality of reinsurers since 2000. The report notes that in the past 12 years, only eight reinsurers have been declared insolvent despite paying claims of more than USD150 billion from events including the World Trade Center attacks, hurricanes Rita, Wilma and Katrina, the Great Tohoku earthquake, and the Thailand floods.

These insolvencies represented less than one percent of global reinsurer capital. Further, those declared insolvent still managed to settle 99 percent of their outstanding obligations.

Kelly Superczynski, Aon Benfield Head of Global Rating Agency Advisory, said: "In 2011 alone, the industry was impacted by USD105 billion of insured losses across 253 separate events, with a significant amount of this risk ceded to the reinsurance industry – more than in 2005. Despite this loss experience, reinsurance capital stood at USD455 billion at the end of 2011 – virtually unchanged from the end of 2010. This level of resilience highlights that reinsurance is one of the most secure and accretive forms of capital available in the global marketplace. As risk analysis tools and capital management techniques become ever more comprehensive, this level of security should continue to improve."

The study examines reinsurers' payment track record and explains the structural, rating agency, market disclosure, and management processes in place that ensure cedents can have a very high level of confidence that their future claims will be paid.