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Survey Report

Willis Re Reinsurance Market Report September 2018: Results for Half-Year 2018

Underlying return on equity deteriorates at H1 2018

Insurer Solutions

September 6, 2018

The latest Willis Re Reinsurance Market Report covers the financial performance of the reinsurance market for the first six months of 2018.

Now in its fourth year, the report provides in-depth analysis of the size and performance of the reinsurance industry, based on the Willis Reinsurance Index group of companies.

Key findings

  • Shareholders’ equity totalled USD 364.9 billion at HY 2018, a 1.6% decrease from USD 371.0 billion at year-end 2017.
  • Aggregate net income increased to USD 14.5 billion (HY 2017: USD 8.3 billion), largely due to a reduction in natural catastrophe losses. This level of profitability also remained reliant on continued support from substantial prior year reserve releases and significant realised investment gains of USD 2.9 billion (HY 2017: USD 3.4 billion).
  • Active capital management continued with USD 11.1 billion of capital returned through dividends and share buybacks (HY 2017: USD 10.8 billion).
  • Shareholders’ funds were also reduced by unrealised investment depreciation of USD 8.3 billion, which was due in part to rising interest rates. This is in marked contrast to the unrealised investment appreciation of USD 8.3 billion at HY 2017, which was largely due to rising stock markets.
  • HY 2018 headline return on equity (RoE) of 7.7% for the INDEX, up from 4.6% at HY 2017.
  • The reported combined ratio for the INDEX at HY 2018 improved to 94.3% (HY 2017: 95.0%).
  • The subset reported an RoE of 8.5%, broadly unchanged from 8.4% at H1, 2017. However, the underlying RoE for the subset deteriorated further to 3.4% at H1, 2018, continuing the downward trend from 4.9% at H1, 2015 to 4.5% at H1, 2016 to 3.7% at H1, 2017.

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