Reinsurance works. It worked well for insurers that faced and ceded record losses in 2011 and then renewed the capacity they sought at terms and conditions that remain accretive. After assuming record losses in 2011, reinsurers rebuilt capital quickly and at the end of the first half of 2012 reinsurance capital stands at a record USD480 billion.
The growth rate of catastrophe reinsurance capacity again exceeds the growth rate of demand for catastrophe reinsurance. The demand for reinsurance for non-catastrophe perils continues to decline. The value proposition of reinsurance in most non-catastrophe lines has declined as insurers have witnessed nearly a decade of steady declines in loss frequency and manageable increases in loss severity-the need to transfer risk that seems to not be occurring has decreased.
Aon Benfield's Reinsurance Market Outlook - Record Reinsurance Performance and Capital report examines the trends seen in the global reinsurance industry during the first half of 2012.