Global reinsurer capital rose by 5% to $595 billion in 2016, reinsurance intermediary Aon Benfield said Tuesday, as companies were able to leverage alternative capital.

The Aon Benfield Aggregate, comprising 23 global reinsurers, found that total equity rose by 4% to $210 billion over the course of the year, driven primarily by solid earnings.

Return on common equity increased 8.4% for the year, based on a combined ratio of 93.5% and an ordinary investment yield of 2.6%. Most of the companies are deriving significant benefits from their ability to leverage alternative capital, Aon Benfield said.

“Reinsurers have been able to take advantage of lower catastrophe risk transfer costs through the formation of sidecar vehicles, sponsorship of catastrophe bonds and increased utilization of retrocession protection,” the report said.

By doing so, Aon Benfield said, companies have reduced the cost of their underwriting capital and allowed them to grow positions with key clients, while reducing many peak zone probable maximum losses relative to capital held.

The ABA combined ratio rose by 2.9 percentage points to 93.5% in 2016. Major losses contributed 5.5 percentage points, while reserve releases provided 5.3 percentage points of benefit.

Property/casualty underwriting profit reported by the ABA companies fell by 28% to $9.1 billion, of which $7.5 billion, or 83% of the total, was derived from prior years.

Interest rates are finally rising in the U.S., but investment returns will remain under pressure in the medium term, the report said. Investment income reported by the ABA companies slipped 4% to $20 billion in 2016, while capital gains more than doubled to $5.8 billion.

The total capital of the 23 ABA companies totaled $255 billion, up from $246 billion a year earlier. Total equity rose by 4% to $210 billion, of which $192 billion was related to common shareholders, $7 billion to preferred shareholders and $11 billion to minority interests. Total debt also rose by 4% to $46 billion, generating a total debt to total capital ratio of 17.9%.

Total gross premiums written by the ABA companies increased 3% to $242 billion over the year, the main driver being consolidation activity. The reduction in the prior year was heavily influenced by strengthening of the U.S. dollar relative to the euro, Aon Benfield said.

Property/casualty premiums rose 6% to $170 billion in 2016, $78 billion of which was direct insurance, or 46% of the total, and $92 billion was assumed reinsurance, or 54% of the total. Aon Benfield said “Other GPW” mainly comprises the life and health reinsurance business written by the European companies, plus Munich Reinsurance Co.’s primary insurance business.

Net property/casualty premiums written by the ABA companies rose 5% to $144 billion in 2016. The reinsurance cession ratio increased to 15.2%, from 14.7% in the prior year, with many companies reporting increased utilization of retrocession protection.

On a combined basis, these companies write about 50% of global property/casualty reinsurance premium, Aon Benfield said.