Global insurance market report [gimar]

47
Figure 4.3a:
Asset composition (year-end 2003–2018)
Source: 2019 IAIS survey
4.3 ASSETS
The Global Reinsurance Market Survey captures 
data on the financial instruments held by reporting 
reinsurers at balance sheet value and market 
value. An analysis of this data shows that the total 
book value of invested assets held by reporting 
reinsurers increased by 2.4% ($21 billion), from 
$880 billion in 2017 to $901 billion in 2018.
In recent years, reinsurers’ asset composition 
(excluding cash) has shifted marginally. However, 
fixed-income debt securities have remained the 
largest asset class held by reinsurers. In 2018, 
debt securities comprised 40% of total assets 
(increasing by 1.4% in nominal terms from 2017). 
Equity securities hold a 37% share of invested 
assets, while exhibiting a 12% increase in
nominal terms.
4.4 PROFITABILITY
The reinsurance industry’s performance can be 
assessed using financial indicators such as
gearing and net gearing ratios, and combined, 
expense and loss ratios. Gearing ratios reflect
the overall capital improvement of reinsurers in 
the year and measure reinsurers’ dependency on 
reinsurance (for direct business) and retrocession 
(for assumed reinsurance business) by comparing 
recoverables with total available capital.
In 2017, reinsurers reported a gross gearing 
ratio
90
of 40.5% and a gearing ratio net of 
collateral and offsetting items of 23.7%. As 
shown in Figure 4.4a, gearing ratios dropped 
between 2009 and 2015, mainly driven by an 
increase in reinsurers’ capital base. This reduced 
the impact of recoverables on reinsurance and 
retrocessions. In 2016, the ratios increased 
substantially as a result of increasing recoverable 
values (as the capital base also improved).
In 2017, the ratios decreased to similar levels 
observed in 2015, before increasing by
4 percentage points in 2018.
Figure 4.4b shows the average combined ratio
of reinsurers surveyed over a 16-year period. 
From 2003 to 2018, the average combined ratio 
was 96.6%, with 2005 reflecting the highest
ratio (113%) and 2007 the lowest (87%).

---