Reinsurers see 6% growth in premiums

Reinsurers faced changes driven primarily by the implementation of IFRS 17.

The ranks of the world's largest reinsurance groups showed strong top-line growth in 2023, with total gross premiums written (GPW) by the top 35 non-IFRS 17 companies rising by over 6%, driven mainly by rate increases rather than exposure growth, AM Best data showed.

Despite global investment market volatility and severe catastrophic losses, many reinsurers reported strong underwriting results, bolstered by significant growth in fixed-income investment yields due to rising reinvestment rates. Bermudian reinsurers, in particular, outperformed, with returns on equity exceeding 20% for many companies.

AM Best's latest report on the global reinsurance segment also revealed significant changes in market rankings, driven primarily by the implementation of IFRS 17. For years, the rankings saw only modest shifts, but this year's list looks different as the new accounting standard has re-engineered the analysis, making comparisons to previous years less relevant.

The hard market conditions reignited by Hurricane Ian and other substantial secondary peril events in 2022 continued to influence the reinsurance sector in 2023. 

These conditions led to significant rate increases and tighter terms and conditions, which, combined with factors like mark-to-market unrealised investment losses and global macroeconomic uncertainty, created a substantial imbalance in reinsurance supply and demand. As a result, the reinsurance segment experienced robust growth in premium volume, underwriting income, and net income.

The report also notes that the market conditions remain strong, with reinsurers increasing their attachment points and maintaining strict underwriting discipline.

Whilst the US avoided a significant named storm making landfall in 2023, the hardening market has kept risk-adjusted premium rates high. Severe convective storms and other secondary perils continue to challenge primary insurers, but reinsurers have mitigated their exposure through higher attachment points established in prior years.

Due to the adoption of IFRS 17, AM Best altered its approach to ranking global reinsurers. Companies reporting under IFRS 17 are ranked separately based on gross reinsurance revenue, whilst non-IFRS 17 companies are ranked based on gross written reinsurance premium. 

This change has resulted in significant negative movement for IFRS 17 reporters when combined into a single list, prompting AM Best to advise users to refer separately to the IFRS 17 and non-IFRS 17 rankings.

How did the reinsurers fare?

Despite these changes, Munich Re and Swiss Re remain the largest global reinsurers. Munich Re reported gross premiums written of $51.3b in 2022, including global specialty insurance, which was excluded from its 2023 gross insurance revenue. 

The company’s third-party reinsurance revenue for 2023 was $32.9b, with growth primarily in property and casualty reinsurance, though partially offset by negative currency translation effects.

Swiss Re, which ranks highest among non-IFRS 17 companies, saw gross life and non-life premium growth of 1.9% in 2023. 

This growth was driven largely by a 5.8% increase in life premiums, whilst non-life premiums declined slightly by 0.7%. In contrast, Swiss Re’s 2022 performance showed flat life premiums and a 2.7% increase in non-life gross premiums.

As the industry continues to adapt to IFRS 17, future rankings are expected to evolve, potentially offering more comparability in the coming years.