Catastrophes hurt reinsurer profits, but capital adequate: Aon Benfield

LONDON—Catastrophes ripped reinsurer profits during the first half of this year, but the companies continue to report adequate capital, Aon Benfield Analytics said in a report issued Thursday.

The reinsurance unit of the Chicago-based brokerage Aon Corp. analyzed the financial position of 28 global reinsurers, including German-based Munich Reinsurance Co. and Zurich-based Swiss Reinsurance Co. Ltd., as of June 30. The reinsurers collectively had a pretax profit of $809 million for the first half of the year, down 95% from the same period in 2010.

Nonetheless, the group of reinsurers comprising the Aon Benfield Aggregate—or ABA—reported capital totaling $242.4 billion as of June 30, a 1.7% decline since the end of 2010.

“Despite the elevated level of catastrophe losses over the past 18 months, financial-strength ratings have remained broadly unchanged, reflecting continued robust capital positions,” Mike Van Slooten, international head of Aon Benfield Analytics’ international market analysis team, said in a statement.

The first-half combined ratio for the 28 ABA companies deteriorated by 20.9 percentage points in falling to 120.6%. This reflected $18.2 billion of catastrophe losses during the six months ended June 30, representing 34.1% of net premiums that reinsurers earned during the period, according to the report, “Aon Benfield Aggregate.”