Aon’s Reinsurance Aggregatethoughtleadership.aonbenfield.com/Documents/202004-ara...Proprietary and Confidential Aon’s Reinsurance Aggregate 3 Global Reinsurer Capital Aon estimates

Proprietary and Confidential

Aon’s Reinsurance Aggregate Results for the Year to December 31, 2019


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


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.



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



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


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


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



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


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)


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%



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)


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)


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



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


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


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



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)


-10%

0%

10%

20%

30%

40%

50%

-20%

-10%

0%

10%

20%

30%

40%

50%Reinsurance GPW Insurance GPW



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)


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



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


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



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


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%



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


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


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)



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


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


-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



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


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


0%

10%

20%

30%

40%

50%

60%

2019 2018

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2019 2018



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)


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)


0%

5%

10%

15%

20%

25%

2019 2018

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2019 2018



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


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


0%

20%

40%

60%

80%

100%

120%

140%

2019 2018

0%

20%

40%

60%

80%

100%

120%

Expense ratio Loss ratio



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


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



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


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


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)



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


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


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%



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


-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%



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


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



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


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



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



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



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





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




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




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




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



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Mike Van Slooten Marie Teissier

Head of Business Intelligence Senior Analyst, Business Intelligence

Reinsurance Solutions Reinsurance Solutions

Aon Aon

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[email protected] [email protected]

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