The european reinsurance sector

AuthorEuropean Insurance and Occupational Pensions Authority (EU body or agency)
Catastrophe activity in 2019 was benign with global in-
sured losses below the average of the last 10 years. Con-
sequently, the resilience of the reinsurance companies
was strengthened after record losses in 2017 and high
losses in 2018. Renewals in 2019 and January 2020 saw
moderate price increases, mostly in regions and lines of
business aected by catastrophes. Growth in global re-
insurance capital was driven by an increase in traditional
capital, whereas alternative capital declined due to the
high natural catastrophe l osses in 2017 and 2018. The issu-
ance of new insurance-linked securities (ILS) in 2019 was
lower than in the two previous years.
The relevance of the reinsurance sector in insuring loss-
es from extreme risk events should become visible in the
context of the COVID-19. However, the impact on the
sector is still to be assessed, as data for the f‌irst quarters
of 2020 has not become available yet. Prof‌itability of the
sector is likely to be impacted through both investment
and underwriting results. Falls in equity markets as well
as low interest rates are combined with potential increas-
ing claims in aected lines of business. Notwithstanding,
reinsurers’ solvency ratios have been well ab ove the reg-
ulatory requirements and should be able to withstand the
negative impact of the outbreak.
Reinsurance gross written premiums (GWP) remained
at around 15% of total GWP in the EEA in Q4-2019,
standing at EUR 224 bn (Figure 3.1). Non-life reinsur-
ance accepted represented 9% of total GWP (EUR 134 bn),
while life reinsurance obligations acco unted for 6% (EUR
90 bn). Overall reinsurance p remiums increased by 4%
when compared to Q4-2018, owing mostly to an increase
in non-life propor tional reinsurance (Figure 3.2). T he latter
was primarily driven by increased premiums written for
the f‌ire and other damage to property insurance, general
liability and motor vehicle liability insurance lines of busi-
ness (Figure 3.3).
Reinsurance premium growth will very likely be im-
pacted by the current COVID-19 outbreak, but it will
be possible to assess the extent of the impact only
once Solvency II data for the year 2020 becomes avail-
able. On one hand, the reduction in economic activity
due to the lockdown measures and travel restrictions in
place in many jurisdictions will most certainly contribute
to lower the demand for certain business lines (e.g. mo-
tor vehicle, marine, aviation and transport, etc.). On the
other hand, the extent to which insurers will adjust risk
mitigating techniques, including t he use of reinsurance, to
support earnings and solvenc y levels remains uncertain.

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