Source: insurancebusinessmag.com

Despite increased loss activity in the third quarter, global (re)insurers’ combined ratios remained strong in the first nine months of 2022, according to a new report from Gallagher Re.

Underwriting performance remained strong through the first nine months of the year with an average combined ratio of 96.9%, the report found. This was supported by double-digit premium growth, lower natural catastrophe loss activity and a reduced expense ratio. Year-on-year premium growth averaged 13% at 9M 2022, driven by improved pricing for commercial lines and reinsurance business, Gallagher Re said.

However, realized and unrealized losses on equity/alternative investment assets drove a lagging return on investment of 7.5% in 9M 2022, compared to 12.4% in 9M 2021. Shareholders’ equity fell by 28% during 9M 2022, spurred largely by a rise in interest rates, which drove down market values of bonds and equities held by global reinsurers.

“The most impacted companies are those with long-duration bond portfolios and high allocation to equities,” the report said. “Capital return through dividends and buybacks also contributed, albeit less significantly, to lowering shareholders’ equity.”