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Aon Benfield: Global reinsurer capital drops YOY to $565B at 2015-end

AonBenfield said in an industry report published April 4 that total globalreinsurer capital, comprising capital from both traditional and alternativemarkets, stood at $565 billion at the end of 2015, down 2% from a year ago.

Traditionalreinsurance capital amounted to $493 billion at 2015-end, dropping 4% from ayear ago due to the strengthening of the U.S. dollar and the impact of risinginterest rates on bond valuations, according to the latest Aon BenfieldAggregate report. The influence of alternative capital, meanwhile, continued togrow, increasing 12% over the period to $72 billion.

Theshareholders' funds of the 27 companies covered by the report fell 4% to $326billion as at 2015-end, although the total was up slightly at constant exchangerates driven by solid earnings. M&A activity led to an increase in themedian capital size to $7 billion in 2015 from $6 billion a year ago.

P&Cunderwriting profit fell 9% on a yearly basis to $15.1 billion in 2015. Of theamount, $8.4 billion was derived from favorable prior-year loss reservedevelopment. The combined ratio of the companies rose by 0.4 percentage pointto 90.2% in 2015.

Netincome attributable to common shareholders amounted to $22.1 billion in 2015,down 12% on a yearly basis and representing an ROE of 9.8%.

Reinsurers'average combined ratio in the decade since hurricane Katrina reached 92.5%,while the average ROE reached 11.1% over the period. The current lull inreinsurer M&A activity is not expected to continue amid the growingpressure on underlying earnings, according to the report.

AonBenfield is the global reinsurance intermediary and capital adviser ofAon Plc.