Profitability in the global reinsurance industry has completely erased weaker profits reported between 2017 and 2020, according to a recent Gallagher Re report, Reinsurance Market Report: Results for half-year 2024.  

Revenue growth remained strong in the first half of the year, at nine per cent, similar to the 2023 half-year growth rate. The report says growth was driven primarily by rate increases, rather than volume growth. “Volume growth was limited due to shifts in business mix and rising attachment points,” they write.  

“Global reinsurers delivered another strong set of results in the first half of 2024 with an ongoing improvement in underwriting profitability, exceptional return on equity (ROE) and a continued building of capital.” 

The industry’s dedicated capital position totalled $766-billion (figures in U.S. dollars) at the end of the first half, an increase of 5.4 per cent when compared to restated 2023 base figures. “The global reinsurance industry’s capital position also remains robust on an economic basis, the measure which Gallagher Re views as more relevant for management teams’ decision making,” they write. “In most cases, solvency is comfortably above management target levels.” 

Natural catastrophe losses 

The report goes on to say that the reinsurance industry’s underlying combined ratio continued to improve, driven by “a better attritional loss ratio and a lower load for normalized natural catastrophes.” The report does note that the better natural catastrophe experience stands in sharp contrast to the overall insured natural catastrophe losses. “This reflects higher attachment points and the nature of 2024 half-year natural catastrophe losses, which were dominated by so-called secondary perils.” 

The underlying combined ratio improved from 96.1 per cent to 93.6 per cent during the period, the strongest level achieved in the last 10 years, they write.  

Finally, reported ROE stabilized at an “exceptionally strong level” of 19.6 per cent in the first half of 2024. Underlying ROE increased two percentage points to 15.5 per cent, driven by improved underwriting margins and higher investment incomes. “The industry earned a seven per cent margin over the cost of capital on an underlying ROE basis, with the underlying ROE almost two times the cost of capital. This is the third year in a row that the industry has earned an underlying ROE above the cost of capital,” they write.