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Proprietary and Confidential
Aon’s Reinsurance Aggregate Results for the Year to December 31, 2019
Proprietary and Confidential
Aon’s Reinsurance Aggregate
Contents
Executive Summary 2
Global Reinsurer Capital 3
ARA Capital 4
Capital Development 5
Capital Management 6
Premium Income 7
Gross Premium Development 8
Reinsurance/Retrocession Purchasing 9
Net Premium Development 11
Earnings 12
Underwriting Performance 13
Investment Results 17
Net Income 18
Return on Equity 19
Valuation 21
Financial Strength Ratings 23
Appendix: ARA Data 24
Proprietary and Confidential
Aon’s Reinsurance Aggregate 2
Executive Summary
Welcome to the latest edition of our report series tracking the financial performance of leading
reinsurance carriers in the global market, also known as Aon’s Reinsurance Aggregate (‘the ARA’).
The ARA underwrites around 50% of the world’s non-life reinsurance premiums and a large majority
of the life reinsurance premiums. It is therefore a reasonable proxy for the sector as a whole.
The 23 companies included in the study are Alleghany, Arch, Argo, Aspen, AXIS, Beazley, Everest
Re, Fairfax, Hannover Re, Hiscox, Lancashire, Mapfre, Markel, Munich Re, PartnerRe, QBE, Qatar
Insurance, RenRe, SCOR, Sirius, Swiss Re, Third Point Re and W.R. Berkley. Timely availability of
relatively consistent financial data is a major factor in constituent selection.
The operating environment remained challenging in 2019. On the underwriting side, reinsurers were
confronted with higher retrocessional costs, adverse development of recent catastrophe losses and
deteriorating trends in US casualty business. At the same time, interest rates went into reverse, as
policymakers looked to address deteriorating prospects for global economic growth.
More positively, reinsurers benefited from a modest increase in demand for cover and the re-pricing of
loss-impacted business, while natural catastrophe losses subsided to a level broadly in-line with long-
term averages. On the investment side, total returns were boosted by very strong stock market
performance and unrealised gains on bond portfolios associated with the cuts in interest rates.
The key highlights of the ARA’s financial performance in 2019 were as follows:
• Total capital stood at USD255 billion at December 31, 2019, up 10% relative to the prior year-
end, split equity USD204 billion (+11%) and debt USD52 billion (+7%). Just over USD9 billion
of capital was returned to investors during the year.
• Property & Casualty (P&C) gross premiums written rose by 9% to USD210 billion, split
primary insurance USD108 billion (+4%) and assumed reinsurance USD102 billion (+14%).
Total P&C net premiums earned rose by 7% to USD165 billion.
• The ARA’s net combined ratio stood at 100.3% (2018: 99.1%), split losses 68.2% (66.7%)
and expenses 32.1% (32.4%). Natural catastrophe losses contributed 6.0pp (7.3pp), while
favourable prior year reserve development provided 1.5pp (3.5pp) of benefit.
• The total investment yield reported through income statements swung from a post-financial
crisis low of 2.6% in 2018, to a high of 4.4% in 2019. The underlying ordinary yield was stable
at 2.8%, with the effect of lower interest rates yet to earn through.
• Pre-tax profit stood at USD21.5 billion in 2019, an increase of 87% relative to the prior year.
Net income virtually doubled to USD18.2 billion, with another USD11.8 billion of unrealized
capital gains taken directly to equity.
• Return on equity, calculated as net income attributable to common shareholders divided by
average common shareholders’ funds, stood at 9.5% (2018: 4.5%), which was around 2pp
higher than the average cost of equity (as reported by Bloomberg).
We believe this report establishes a useful ‘baseline’ from which to assess the potential impacts of the
COVID-19 crisis on the reinsurance sector. The stock market value of the listed ARA companies fell
by around a third in the first quarter of 2020 (see Valuation section), taking the median price-to-book
ratio from 1.3x to 0.9x. The impact in terms of reported results will be covered in later editions.
Proprietary and Confidential
Aon’s Reinsurance Aggregate 3
Global Reinsurer Capital
Aon estimates that global reinsurer capital rose by 7%, or USD40 billion, to USD625 billion over the
year to December 31, 2019. This calculation is a broad measure of the capital available for insurers to
trade risk with and includes both traditional and alternative forms of reinsurer capital.
Exhibit 1: Global Reinsurer Capital
Source: Aon / company reports
Traditional equity was calculated at USD530 billion at the end of 2019, up USD42 billion, or 9%,
relative to a year earlier. The main driver was strong investment performance, as stock markets
rebounded to record highs and cuts in interest rates resulted in unrealized gains on bond portfolios.
Assets under management in the alternative capital sector were estimated at USD95 billion at the end of 2019, down 2%, or USD2 billion, relative to a year earlier. The total is shown gross of the collateral trapped on contracts impacted by recent major natural catastrophe losses.
17 22 19 22 24 28 44 50 64 72 81 89 97 95
368 388321
378447 428
461490
511 493514 516 488
5306%-17% 18%
18%-3% 11%
7%6% -2% 5%
2% -3% 7%
385410
340
400
470 455
505540
575 565595 605
585625
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
US
D (
bill
ions)
Alternative capital Traditional capital Global reinsurer capital
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Aon’s Reinsurance Aggregate 4
ARA Capital
Total capital deployed by the ARA stood at USD255 billion at December 31, 2019, an increase of
USD23 billion, or 10%, relative to a year earlier. Total equity rose by USD19 billion, or 11%, to
USD204 billion, of which USD190 billion related to common shareholders, USD5 billion to preferred
shareholders and USD8 billion to minority interests. Total debt rose by 7% to USD52 billion,
generating a debt-to-total-capital ratio of 20.3% (2018: 20.8%).
Exhibit 2: ARA Total Capital
Source: Aon / company reports
The total capital positions of the 23 ARA constituents at the end of 2019 are shown in Exhibit 3. The
three largest companies represented 44% of the total, while the median size was USD9 billion.
Exhibit 3: Total Capital at December 31, 2019
Source: Aon / company reports
130146
122152 157 161
184 186 196 192 199 200184
204
31
35
35
3340 37
44 4441 42
44 4648
52
161
181
157
185198 198
228 230 237 234243 246
233
255
0
50
100
150
200
250
300
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
US
D (b
illio
ns)
Total equity Debt Total capital
0
5
10
15
20
25
30
35
40
US
D (
bill
ions)
Total equity Debt
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Aon’s Reinsurance Aggregate 5
Capital Development
Upon conversion to US dollars, ARA total equity stood at USD204 billion at December 31, 2019. The
main drivers of the USD19 billion increase relative to a year earlier are summarised in the top half of
Exhibit 4. Net income of USD18.2 billion and unrealised capital gains of USD11.8 billion out-weighed
dividends and share buybacks of USD9.1 billion and other adjustments of USD1.4 billion.
Exhibit 4: Evolution of ARA Total Equity
Source: Aon / company reports
In original reporting currencies, only three ARA constituents posted declines in total equity, as shown
in Exhibit 5, while seven companies saw healthy growth of more than 15%.
Exhibit 5: 2019 Changes in Total Equity (Original Reporting Currency)
Source: Aon / company reports
184.1
18.2
11.8 -2.1-7.0
-1.4 203.5
160
180
200
220
FY 2018equity
Additionalcapital
Netincome
Foreignexchange
Unrealizedcapital gains
Sharebuybacks
Dividends Other FY 2019equity
US
D (
bill
ions)
200.20.1
9.2 -3.7-7.8
-3.7-6.7
-3.5 184.1
160
180
200
220
FY 2017equity
Additionalcapital
Netincome
Foreignexchange
Unrealizedcapital losses
Sharebuybacks
Dividends Other FY 2018equity
US
D (
bill
ions)
-5%
5%
15%
25%
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Aon’s Reinsurance Aggregate 6
Capital Management
Over the last 13 years, the ARA has returned USD138 billion of capital to investors, in the form of
dividends and share buybacks, representing an average of 6.3% of opening equity per year.
Exhibit 6: ARA Dividends and Share Buybacks (% of Opening Equity)
Source: Aon / company reports
Distributions by ARA constituent in 2019, relative to opening equity, are shown in Exhibit 7.
Exhibit 7: 2019 Dividends and Share Buybacks (% of Opening Equity)
Source: Aon / company reports
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Dividends Share buybacks
0%
2%
4%
6%
8%
10%
12%
14%
16%
Dividends Share buybacks
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Aon’s Reinsurance Aggregate 7
Premium Income
Total gross premiums written (GPW) by the ARA climbed by 6% to USD278 billion in 2019. Property
and casualty (P&C) premiums rose by 9%, or USD17 billion, to USD210 billion, split primary
insurance USD108 billion (+4%) and assumed reinsurance USD102 billion (+14%). ‘Other’ mainly
comprises life and health reinsurance business underwritten by the European composite reinsurers.
Exhibit 8: ARA Total Gross Premiums Written
Source: Aon / company reports
Exhibit 9 shows a breakdown of the total GPW of each ARA constituent in 2019, sorted by P&C
reinsurance volume, based on our best interpretation of the available data.
Exhibit 9: 2019 Total Gross Premiums Written
Source: Aon / company reports
71 78 74 78 89 102
93 83 95 97104
108
7567
6668
6968
239227 235
243261
278
0
50
100
150
200
250
300
2014 2015 2016 2017 2018 2019
US
D (
bill
ions)
P&C Reinsurance P&C Insurance Other
0
10
20
30
40
50
60
US
D (
bill
ions)
P&C Re L&H Re P&C Insurance L&H Insurance
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Aon’s Reinsurance Aggregate 8
Gross Premium Development
In original reporting currencies, three ARA constituents reported total P&C GPW growth of more than
20% in 2019, as shown in Exhibit 10. The significant expansion at RenRe was primarily driven by the
acquisition of Tokio Millennium Re.
Exhibit 10: 2019 P&C GPW Growth (Original Reporting Currency)
Note: * Excluding ERGO Source: Aon / company reports
Exhibit 11 captures the growth/contraction in the P&C primary insurance and assumed reinsurance
books of the ARA constituents in 2019, based on our best interpretation of the available data. The
chart is sorted by growth in P&C reinsurance premiums.
Exhibit 11: 2019 P&C Segmental Growth (Original Reporting Currency)
Note: * Excluding ERGO Source: Aon / company reports
-10%
0%
10%
20%
30%
40%
50%
-20%
-10%
0%
10%
20%
30%
40%
50%Reinsurance GPW Insurance GPW
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Aon’s Reinsurance Aggregate 9
Reinsurance/Retrocession Purchasing
Total P&C net premiums written (NPW) by the ARA rose by 9% to USD202 billion in 2019. Excluding
the impact of reinstatement premiums in 2017, the outwards cession ratio has shown a steady
increase over the last five years, with more risk being transferred to the capital markets.
Exhibit 12: ARA Outwards Cession Ratios (P&C Business Only)
Source: Aon / company reports
The outwards cession ratios of each ARA constituent over the last two years are shown in Exhibit 13.
15 companies ceded a higher proportion of their P&C business in 2019.
Exhibit 13: Outwards Cession Ratios (P&C Business Only)
Note: * Excluding fronting business ** Excluding ERGO Source: Aon / company reports
14.3%
12.7%
13.9% 14.1% 13.8%13.2% 13.5%
12.0% 12.0%
14.0% 14.2%15.2% 14.9%
15.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2019 2018
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Aon’s Reinsurance Aggregate 10
Capital grew faster than premiums in 2019, resulting in a reduction in underwriting leverage across
the ARA on both a gross and net basis, as shown in Exhibit 14.
Exhibit 14: ARA Gross and Net Premium Leverage
Source: Aon / company reports
97%
93%
114%
98%
95%
110%
99%
103%101%
97% 97%
99%
112%
109%
85%
84%
102%
88%84%
98%
88%
93%91%
86% 85%87%
98%
95%
80%
85%
90%
95%
100%
105%
110%
115%
120%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total GPW / total capital Total NPW / total capital
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Aon’s Reinsurance Aggregate 11
Net Premium Development
Total P&C net premiums earned (NPE) by the ARA rose by 7% to USD165 billion in 2019. The
volumes by ARA constituent are shown below.
Exhibit 15: 2019 Total P&C NPE
Note: * Excluding ERGO Source: Aon / company reports
In original reporting currencies, ten ARA constituents reported growth in total P&C NPE of more than
10% in 2019, as shown in Exhibit 16. Substantial expansion at RenRe was primarily driven by the
acquisition of Tokio Millennium Re.
Exhibit 16: 2018 Growth in Total P&C NPE (Original Reporting Currency)
Note: * Excluding Ergo Source: Aon / company reports
0
4
8
12
16
20
24
US
D (
bill
ions)
-10%
0%
10%
20%
30%
40%
50%
60%
70%
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Aon’s Reinsurance Aggregate 12
Earnings
The ARA reported pre-tax profit of USD21.5 billion in 2019, almost double the level of the prior year.
Ordinary investment income was flat at USD21.9 billion, but the total return was boosted by a positive
swing of USD14.2 billion in realised and unrealised capital gains. The P&C underwriting result was a
loss of USD0.4 billion, compared to a profit of USD1.3 billion in 2018.
Exhibit 17: ARA Pre-Tax Results
Source: Aon / company reports
The distribution of the reported pre-tax results of the ARA constituents in 2019 is shown in Exhibit 18.
Only two companies reported losses on this basis.
Exhibit 18: 2019 Pre-Tax Results
Source: Aon / company reports
25.228.3
10.6
21.919.6
7.6
24.021.3
25.122.5
20.5
7.211.5
21.5
-30
-20
-10
0
10
20
30
40
50
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
US
D (
bill
ions)
Other Pure life technical result P&C underwriting resultInvestment income Capital gains/losses Pre-tax profit
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
US
D (
bill
ions)
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Aon’s Reinsurance Aggregate 13
Underwriting Performance
The ARA net combined ratio deteriorated to 100.3% in 2019, from 99.1% in 2018. Premium growth
resulted in a small reduction in the expense ratio to 32.1%, while the attritional loss ratio rose to a
period high of 63.7%, driven by large man-made losses and deteriorating casualty trends. Natural
catastrophe losses were in-line with the ARA long-term average, while reserve releases were sharply
lower, reflecting adverse development of recent major losses and deteriorating casualty experience.
The accident year combined ratio improved to 101.8% (2018: 102.6%).
Exhibit 19: ARA Net Combined Ratio
Source: Aon / company reports
The net combined ratios reported by the ARA constituents over the last two years are shown in
Exhibit 20. Nine companies posted underwriting losses on their total P&C business in 2019.
Exhibit 20: Net Combined Ratios
Note: * Excluding ERGO Source: Aon / company reports
-0.8% -2.4% -3.9% -2.6% -3.6% -5.0% -4.3% -4.4% -4.8% -5.6% -5.4% -4.0% -3.5% -1.5%
27.4% 28.8% 28.6% 29.0% 29.7% 30.0% 30.2% 30.9% 31.4% 32.7% 32.8% 32.3% 32.4% 32.1%
61.6% 61.0% 63.6% 63.1% 60.7% 61.2% 59.8% 60.6% 61.5% 61.9% 62.0% 63.2% 63.0% 63.7%
1.6% 3.2%7.1%
1.7%8.5%
19.6%
6.9% 4.0% 2.4% 1.6% 4.1%15.0%
7.3% 6.0%89.8% 90.6%95.4%
91.1%95.3%
105.8%
92.6% 91.1% 90.5% 90.7% 93.6%
106.6%99.1%100.3%
-10%
10%
30%
50%
70%
90%
110%
130%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Nat cat loss ratio Attritional loss ratio Expense ratio Prior year reserve adjustment
40%
50%
60%
70%
80%
90%
100%
110%
120%
2019 2018
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Aon’s Reinsurance Aggregate 14
Operating efficiency is becoming an increasingly important competitive differentiator across the
reinsurance sector. The net expense ratios reported by the ARA constituents for the last two years are
shown in Exhibit 21. Most companies showed a small improvement in 2019.
Exhibit 21: Net Expense Ratios
Note: * Excluding ERGO Source: Aon / company reports
The net loss ratios reported by the ARA constituents for the last two years are shown in Exhibit 22.
Results deteriorated for more than half of the constituents in 2019.
Exhibit 22: Net Loss Ratios
Note: * Excluding ERGO Source: Aon / company reports
0%
10%
20%
30%
40%
50%
60%
2019 2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2019 2018
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Aon’s Reinsurance Aggregate 15
Across the ARA, disclosed losses from accident year natural catastrophe events fell by 12% to
USD9.9 billion in 2019, derived mainly from Hurricane Dorian and Typhoons Faxai and Hagibis.
Disclosures by constituent for the last two years, as a percentage of P&C NPE in those years, are
shown in Exhibit 23. Reporting standards are not consistent across the industry and this represents
our best interpretation of the available data.
Exhibit 23: Net Natural Catastrophe Losses (Combined Ratio Points)
Note: * Excluding ERGO Source: Aon / company reports
Across the ARA, favourable development of prior year reserves more than halved to USD2.5 billion in
2019. The adjustments of individual constituents as a percentage of total P&C NPE for the last two
years are shown in Exhibit 24. Five companies reported adverse development in 2019.
Exhibit 24: Prior Year Loss Reserve Adjustments (Combined Ratio Points)
Note: * Excluding ERGO Source: Aon / company reports
0%
5%
10%
15%
20%
25%
2019 2018
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2019 2018
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Aon’s Reinsurance Aggregate 16
Exhibit 25 shows the accident year combined ratios reported by the ARA constituents over the last
two years (i.e. before the impact of prior year reserve adjustments). On this basis, only four
companies were underwriting profitably in 2019.
Exhibit 25: Accident Year Combined Ratios
Note: * Excluding ERGO Source: Aon / company reports
The average net combined ratio reported by each ARA constituent over the last five years is shown in
Exhibit 26.
Exhibit 26: Five-Year Average Combined Ratios
Note: * Excluding ERGO Source: Aon / company reports
0%
20%
40%
60%
80%
100%
120%
140%
2019 2018
0%
20%
40%
60%
80%
100%
120%
Expense ratio Loss ratio
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Aon’s Reinsurance Aggregate 17
Investment Results
The ARA’s invested asset base totalled USD807 billion at December 31, 2019. The allocation by
investment type was fixed-income securities 63%, loans 8%, cash/short-term 8%, deposits with
cedants 5%, equities 6%, real estate 2% and other 7%.
Ordinary and total investment yields reported through ARA income statements since 2006 are shown
in Exhibit 27. The ordinary yield was unchanged at 2.8% in 2019. The total return was at its highest
point since the financial crisis, reflecting the strong stock market recovery and unrealised gains on
bond portfolios associated with declining interest rates.
Exhibit 27: ARA Investment Yield
Source: Aon / company reports
Exhibit 28 shows the ordinary and total investment yields reported by the ARA constituents through
their income statements in 2019.
Exhibit 28: 2019 Investment Yields
Note: * Ordinary investment not disclosed Source: Aon / company reports
4.7% 4.8%
2.1%
3.8%
4.1%
3.7%4.0%
3.4%
3.8%
3.0%
3.4%
3.8%
2.6%
4.4%
3.8%
4.3%
3.9%3.6%
3.3% 3.5%
3.1%2.9% 2.9%
2.7% 2.6% 2.6%
2.8%
2.8%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total investment return (incl. capital gains/losses) Ordinary investment return
0%
2%
4%
6%
8%
10%
12%
14%
Total investment yield Ordinary investment yield
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Aon’s Reinsurance Aggregate 18
Net Income
The ARA reported net income of USD18.2 billion in 2019, almost double the level of the prior year.
The progression since 2006 is shown in Exhibit 29. Net income aggregates to close to USD220 billion
over the period shown.
Exhibit 29: ARA Net Income
Source: Aon / company reports
The reported net income of the ARA constituents in 2019 is shown in Exhibit 30. Three companies
reported overall losses for the year.
Exhibit 30: 2019 Net Income
Source: Aon / company reports
19.5
22.3
5.2
17.6
15.7
7.5
19.8 19.8
21.8
19.8
16.9
5.7
9.2
18.2
0
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
US
D (
bill
ions)
-0.4
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
US
D (
bill
ions)
Proprietary and Confidential
Aon’s Reinsurance Aggregate 19
Return on Equity
Exhibit 31 shows the development of net income attributable to common shareholders relative to
average common shareholders’ funds across the ARA since 2006. Return on equity over this entire
period averages 9.4%. Strong investment performance enabled the ARA to cover the cost of equity in
2019, after two years of sub-par performance.
Exhibit 31: ARA Return on Common Equity
Source: Aon / company reports
The reported return on common equity across the ARA constituents in 2019 is shown in Exhibit 32.
Five companies were able to generate a return of more than 15%, while three reported losses.
Exhibit 32: 2019 Return on Common Equity
Source: Aon / company reports
15.5% 16.2%
3.7%
12.9%
10.1%
4.4%
11.5%10.7%
11.3%10.1%
8.4%
2.7%
4.5%
9.5%
8.9%10.0% 10.0%
9.2%
10.8%
9.0% 8.8% 8.7%8.1%
7.7% 7.5%
8.4%
9.0%
7.4%
0%
5%
10%
15%
20%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
ARA return on common equity ARA cost of equity (median)
-15%
-10%
-5%
0%
5%
10%
15%
20%
Proprietary and Confidential
Aon’s Reinsurance Aggregate 20
The average return on common equity reported by the ARA constituents over the last five years is
shown in Exhibit 33.
Exhibit 33: Five-Year Average Return on Common Equity
Source: Aon / company reports
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Proprietary and Confidential
Aon’s Reinsurance Aggregate 21
Valuation
The development of the ARA’s total stock market value since the beginning of 2008 is shown in
Exhibit 34. Having reached a peak level at February 19, 2020, market capitalization fell by 46% over
the five weeks to March 23, 2020, as the COVID-19 crisis took hold. There has since been a modest
recovery – the year-to-date decline was 29% as at April 17, 2020.
Exhibit 34: ARA Market Capitalization Index
Source: Bloomberg, as of April 17, 2020
All listed ARA constituents have experienced year-to-date declines in share price, as shown in Exhibit
35. Aspen and PartnerRe are privately-owned.
Exhibit 35: ARA Share Price Development in 2020
Source: Bloomberg, as of April 17, 2020
40
60
80
100
120
140
160
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
-50%
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
40
60
80
100
120
Jan Feb Mar Apr
Proprietary and Confidential
Aon’s Reinsurance Aggregate 22
The movement in trailing price-to-book ratios in 2020 is shown in Exhibit 36. Strong stock market
performance drove the median to ~1.3x at the end of 2019. The market sell-off reduced this to ~0.9x
at April 17, 2020, with only 7 companies trading above book value.
Exhibit 36: ARA Trailing Price-to-Book Ratios
Source: Bloomberg, as of April 17, 2020
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6April 17, 2020 January 2, 2020
Median Median
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Aon’s Reinsurance Aggregate 23
Financial Strength Ratings
Exhibit 37 shows the current AM Best and Standard & Poor’s financial strength ratings and outlooks of the lead reinsurance operating entities within each ARA constituent. Changes since the beginning of 2019 are colour-coded. All three downgrades in the period occurred in 2020.
Exhibit 37: Financial Strength Ratings
ARA Constituent Lead Reinsurance Operating Entity A.M. Best Standard & Poor’s
Arch Arch Reinsurance Ltd A+ Stable A+ Negative
Argo Argo Re Ltd A- Negative - -
Aspen Aspen Bermuda Ltd A Negative A- Stable
AXIS AXIS Specialty Ltd A+ Negative A+ Stable
Beazley Lloyd’s Syndicate 2623 A Stable A+ Stable
Everest Re Everest Reinsurance (Bermuda) Ltd A+ Stable A+ Stable
Hannover Re Hannover Rück SE A+ Stable AA- Stable
Hiscox Hiscox Insurance Company (Bermuda) Ltd A Stable A Stable
Lancashire Lancashire Insurance Company Ltd A Stable A- Stable
Mapfre MAPFRE Re, Compania de Reaseguros SA A Stable A+ Stable
Markel Markel Bermuda Ltd A Stable A Stable
Munich Re Munich Reinsurance Company A+ Stable AA- Stable
Fairfax Odyssey Reinsurance Company A Stable A- Stable
PartnerRe Partner Reinsurance Company Ltd A+ URD A+ Positive
Qatar Insurance Qatar Reinsurance Company Limited A Negative A Negative
QBE QBE Europe SA/NV A Stable A+ Stable
RenRe Renaissance Reinsurance Ltd A+ Stable A+ Stable
SCOR SCOR SE A Stable AA- Stable
Sirius Sirius International Insurance Corporation (publ) A- URN A- CWN
Swiss Re Swiss Reinsurance Company A+ Stable AA- Stable
Third Point Re Third Point Reinsurance Company Ltd A- Negative - -
Alleghany Transatlantic Reinsurance Company A+ Stable A+ Stable
W.R. Berkley Berkley Insurance Company A+ Stable A+ Stable
● Upgrade / outlook raised since January 1, 2019 ● Downgrade / outlook lowered since January 1, 2019 URD = Under Review Developing; URN = Under Review Negative; CWN = Credit Watch Negative Ratings as at April 17, 2020 Source: Aon / AM Best / Standard & Poor’s
Proprietary and Confidential
Aon’s Reinsurance Aggregate 24
Appendix: ARA Data
Exhibit 38: Results for the Year to December 31, 2019
Company
Reporting currency (millions)
P&C GPW
2018
P&C GPW
2019 Change
P&C NPE
2018
P&C NPE
2019 Change
Alleghany USD 5,896 6,656 13% 4,976 5,478 10%
Arch USD 6,961 8,139 17% 5,232 5,786 11%
Argo USD 2,955 3,129 6% 1,732 1,730 0%
Aspen USD 3,447 3,442 0% 2,215 2,293 4%
AXIS USD 6,910 6,899 0% 4,791 4,587 -4%
Beazley USD 2,615 3,004 15% 2,085 2,347 13%
Everest Re USD 8,475 9,133 8% 6,932 7,404 7%
Fairfax USD 15,528 17,511 13% 11,909 12,545 5%
Hannover Re EUR 11,976 14,781 23% 10,804 12,798 18%
Hiscox USD 3,778 4,030 7% 2,574 2,636 2%
Lancashire USD 639 707 11% 414 422 2%
Mapfre EUR 17,061 17,559 3% 13,890 13,764 -1%
Markel USD 5,799 6,434 11% 4,712 5,050 7%
Munich Re* EUR 20,437 22,091 8% 18,618 20,566 10%
PartnerRe USD 5,065 5,792 14% 4,302 5,058 18%
QBE USD 13,657 13,442 -2% 11,640 11,609 0%
RenRe USD 3,310 4,808 45% 1,976 3,338 69%
SCOR EUR 6,175 7,147 16% 5,216 5,721 10%
Swiss Re USD 20,864 26,095 25% 20,020 23,441 17%
Qatar Insurance QAR 12,606 12,843 2% 11,346 10,832 -5%
Sirius USD 1,821 1,903 4% 1,262 1,442 14%
Third Point Re USD 578 632 9% 621 700 13%
W.R. Berkley USD 7,702 8,262 7% 6,372 6,633 4%
ARA (Total) USD 185,165 202,460 9% 154,174 164,618 7%
Notes: * Excluding ERGO Figures in reporting currencies, but converted to USD (millions) for ARA lines Source: Aon / company reports
Proprietary and Confidential
Aon’s Reinsurance Aggregate 25
Exhibit 38: Results for the Year to December 31, 2019 (continued)
Calendar Year
Company
Net Loss Ratio
2018
Net Loss Ratio
2019
Expense Ratio
2018
Expense Ratio
2019
Combined Ratio
2018
Combined Ratio
2019 Change
Alleghany 70.7% 67.3% 32.5% 32.1% 103.2% 99.4% -3.8pp
Arch 55.2% 54.2% 28.3% 28.4% 83.6% 82.5% -1.1pp
Argo 60.1% 70.6% 37.8% 38.5% 97.9% 109.1% 11.2pp
Aspen 71.0% 73.2% 39.0% 40.7% 110.0% 114.0% 4.0pp
AXIS 66.6% 66.4% 33.3% 36.2% 99.9% 102.6% 2.7pp
Beazley 58.9% 61.9% 39.0% 37.9% 97.9% 99.8% 1.9pp
Everest Re 81.5% 66.5% 27.3% 29.0% 108.8% 95.5% -13.3pp
Fairfax 60.6% 63.4% 34.6% 33.8% 95.2% 97.2% 1.9pp
Hannover Re 66.9% 69.0% 30.0% 29.5% 96.9% 98.5% 1.7pp
Hiscox 48.5% 60.4% 46.4% 45.3% 94.9% 105.7% 10.8pp
Lancashire 40.0% 30.8% 52.2% 50.1% 92.2% 80.9% -11.3pp
Mapfre 69.8% 69.0% 27.8% 28.6% 97.6% 97.6% 0.0pp
Markel 59.9% 57.3% 37.7% 37.2% 97.6% 94.4% -3.1pp
Munich Re* 65.2% 66.7% 34.2% 34.4% 99.4% 101.0% 1.6pp
PartnerRe 73.7% 72.4% 28.1% 28.0% 101.8% 100.4% -1.4pp
QBE 63.6% 69.8% 32.3% 30.2% 95.9% 100.0% 4.1pp
RenRe 56.7% 62.8% 30.9% 29.5% 87.6% 92.3% 4.7pp
SCOR 66.5% 68.1% 32.8% 30.9% 99.3% 99.0% -0.3pp
Swiss Re 74.2% 79.7% 32.4% 31.7% 106.6% 111.4% 4.7pp
Qatar Insurance 69.3% 70.2% 32.1% 32.6% 101.5% 102.9% 1.4pp
Sirius 71.3% 81.2% 31.8% 29.6% 103.1% 110.8% 7.7pp
Third Point Re 70.5% 57.6% 36.2% 45.6% 106.8% 103.2% -3.6pp
W.R. Berkley 62.5% 62.4% 32.6% 31.1% 95.1% 93.5% -1.6pp
ARA 66.8% 68.2% 32.4% 32.1% 99.1% 100.3% 1.1pp
Note: * Excluding ERGO Source: Aon / company reports
Proprietary and Confidential
Aon’s Reinsurance Aggregate 26
Exhibit 38: Results for the Year to December 31, 2019 (continued)
Company
PY Reserve
Adjustment
2018
PY Reserve
Adjustment
2019
Adjustment as % of
NPE
2018
Adjustment as % of
NPE
2019
Acc. Year Combined
Ratio
2018
Acc. Year Combined
Ratio
2019 Change
Alleghany -329 -185 6.6% 3.4% 109.9% 102.8% -7.1pp
Arch -273 -164 5.2% 2.8% 88.8% 85.4% -3.4pp
Argo -18 138 1.0% -8.0% 98.9% 101.1% 2.1pp
Aspen -111 60 5.0% -2.6% 115.0% 111.4% -3.6pp
AXIS -200 7 4.2% -0.2% 104.1% 102.4% -1.7pp
Beazley -115 -10 5.5% 0.4% 103.4% 100.2% -3.2pp
Everest Re 387 -64 -5.6% 0.9% 103.2% 96.3% -6.9pp
Fairfax -789 -480 6.6% 3.8% 101.9% 101.0% -0.9pp
Hannover Re -997 -834 9.2% 6.5% 106.1% 105.0% -1.1pp
Hiscox -327 -26 12.7% 1.0% 107.6% 106.7% -0.9pp
Lancashire -127 -88 30.7% 20.9% 122.9% 101.8% -21.1pp
Mapfre n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Markel -551 -535 11.7% 10.6% 109.3% 105.0% -4.2pp
Munich Re -856 -1,154 4.6% 5.6% 104.0% 106.7% 2.6pp
PartnerRe -249 -57 5.8% 1.1% 107.6% 101.5% -6.1pp
QBE -113 -96 1.0% 0.8% 96.8% 100.8% 4.0pp
RenRe -271 -27 13.7% 0.8% 101.3% 93.1% -8.2pp
SCOR -100 -60 1.9% 1.0% 101.3% 100.0% -1.2pp
Swiss Re 79 1,345 -0.4% -5.7% 106.3% 105.6% -0.6pp
Qatar Insurance n.d. n.d. n.d. n.d. n.d. n.d. n.d.
Sirius -7 104 0.6% -7.2% 103.7% 103.6% -0.1pp
Third Point Re 4 -86 -0.7% 12.4% 106.1% 115.5% 9.4pp
W.R. Berkley -39 -19 0.6% 0.3% 95.7% 93.8% -1.9pp
ARA (Total) -5,346 -2,473 3.5% 1.5% 102.6% 101.8% -0.8pp
Note: * Excluding ERGO Figures in reporting currencies, but converted to USD (millions) for ARA lines Source: Aon / company reports
Proprietary and Confidential
Aon’s Reinsurance Aggregate 27
Exhibit 38: Results for the Year to December 31, 2019 (continued)
Company
Net Investment
Income
2018
Net Investment
Income
2019
Capital Gains / Losses
2018
Capital Gains / Losses
2019
Total Investment
Return
2018
Total Investment
Return
2019 Change
Alleghany 501 550 -234 683 267 1,234 362%
Arch 564 628 -378 367 185 995 436%
Argo 133 151 -72 80 61 231 278%
Aspen 198 197 -65 -44 134 153 15%
AXIS 439 479 -156 93 283 572 102%
Beazley 95 112 -54 152 41 264 542%
Everest Re 581 647 -127 185 454 832 83%
Fairfax 1,005 1,050 405 1,836 1,410 2,885 105%
Hannover Re 1,420 1,491 110 266 1,530 1,757 15%
Hiscox 97 118 -61 107 37 225 512%
Lancashire 23 52 -5 9 18 61 231%
Mapfre 1,561 1,415 -32 965 1,528 2,380 56%
Markel 434 452 -438 1,602 -3 2,054 n.m.
Munich Re 5,895 5,984 528 2,470 6,423 8,454 32%
PartnerRe 416 449 -390 887 26 1,335 n.m.
QBE 689 567 -143 492 546 1,059 94%
RenRe 280 447 -166 356 114 803 604%
SCOR 550 605 82 71 632 676 7%
Swiss Re 4,075 4,171 14 1,928 4,089 6,099 49%
Qatar Insurance 833 774 62 378 895 1,152 29%
Sirius 71 85 -21 137 51 222 340%
Third Point Re 251 283 0 0 251 283 12%
W.R. Berkley 674 646 154 121 829 766 -8%
ARA 21,886 21,922 -905 13,316 20,980 35,238 68%
Notes: Figures in reporting currencies, but converted to USD (millions) for ARA lines n.m. = not meaningful Source: Aon / company reports
Proprietary and Confidential
Aon’s Reinsurance Aggregate 28
Exhibit 38: Results for the Year to December 31, 2019 (continued)
Company
Net Income
2018
Net Income
2019 Change
Return on Equity*
2018
Return on Equity*
2019 Change
Alleghany 55 890 1,529% 0.5% 10.4% 9.9pp
Arch 728 1,693 133% 7.4% 16.5% 9.1pp
Argo 64 -8 n.m. 3.6% -0.5% -4.0pp
Aspen -146 -242 66% -7.8% -12.7% -4.9pp
AXIS 43 323 652% 0.0% 6.3% 6.2pp
Beazley 68 234 243% 4.6% 15.1% 10.5pp
Everest Re 89 1,009 1,034% 1.1% 11.9% 10.8pp
Fairfax 818 1,971 141% 2.7% 15.8% 13.1pp
Hannover Re 1,146 1,373 20% 12.2% 13.3% 1.1pp
Hiscox 118 49 -59% 5.1% 2.2% -2.9pp
Lancashire 38 118 214% 3.4% 10.4% 7.0pp
Mapfre 878 955 9% 6.4% 7.2% 0.9pp
Markel -130 1,799 n.m. -1.4% 17.8% 19.1pp
Munich Re 2,276 2,707 19% 8.5% 9.6% 1.1pp
PartnerRe -86 937 n.m. -2.2% 14.4% 16.6pp
QBE 378 547 45% 4.5% 6.7% 2.1pp
RenRe 269 950 253% 4.7% 14.7% 10.0pp
SCOR 322 422 31% 5.4% 6.9% 1.6pp
Swiss Re 440 769 75% 1.4% 2.5% 1.2pp
Qatar Insurance 664 671 1% 8.2% 8.0% -0.2pp
Sirius -17 -46 173% -2.4% -2.3% 0.1pp
Third Point Re 185 201 8% 12.9% 15.3% 2.3pp
W.R. Berkley 649 684 5% 11.8% 11.8% 0.0pp
ARA 9,201 18,173 97.5% 4.5% 9.5% 5.0pp
Notes: * Common net income as a percentage of average common equity Figures in reporting currencies, but converted to USD (millions) for ARA lines n.m. = not meaningful Source: Aon / company reports
Proprietary and Confidential
Aon’s Reinsurance Aggregate 29
Exhibit 38: Results for the Year to December 31, 2019 (continued)
Company
Cash and Investments
2018
Cash and Investments
2019 Change
Total Equity
2018
Total Equity
2019 Change
Alleghany 19,306 20,826 8% 7,862 8,981 14%
Arch 22,056 24,676 12% 9,440 11,497 22%
Argo 4,926 5,237 6% 1,747 1,781 2%
Aspen 7,915 7,802 -1% 2,640 2,726 3%
AXIS 14,986 15,879 6% 5,030 5,544 10%
Beazley 5,046 5,826 15% 1,467 1,625 11%
Everest Re 18,868 21,238 13% 7,861 9,133 16%
Fairfax 38,683 38,923 1% 17,365 17,907 3%
Hannover Re 52,871 58,668 11% 9,542 11,354 19%
Hiscox 6,327 6,662 5% 2,259 2,190 -3%
Lancashire 1,881 1,954 4% 1,068 1,194 12%
Mapfre 48,820 53,028 9% 9,198 10,106 10%
Markel 19,238 22,258 16% 9,274 11,256 21%
Munich Re 219,761 231,659 5% 26,500 30,576 15%
PartnerRe 17,097 18,617 9% 6,517 7,270 12%
QBE 22,915 24,399 6% 8,400 8,153 -3%
RenRe 12,994 18,748 44% 5,045 5,971 18%
SCOR 29,703 31,523 6% 5,828 6,374 9%
Swiss Re 132,750 120,260 -9% 28,727 31,037 8%
Qatar Insurance 23,638 25,080 6% 7,972 8,601 8%
Sirius 3,729 3,963 6% 1,938 1,866 -4%
Third Point Re 2,237 2,644 18% 1,205 1,414 17%
W.R. Berkley 18,541 19,497 5% 5,480 6,118 12%
ARA 778,630 806,614 4% 184,065 203,511 11%
Figures in reporting currencies, but converted to USD (millions) for ARA lines Source: Aon / company reports
Proprietary and Confidential
Aon’s Reinsurance Aggregate 30
Contact Information
Mike Van Slooten Marie Teissier
Head of Business Intelligence Senior Analyst, Business Intelligence
Reinsurance Solutions Reinsurance Solutions
Aon Aon
+44 (0) 7522 8106 +44 (0) 7522 3951
mike.vanslooten@aon.com marie.teissier@aon.com
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