Munich Re Again Tops List of 50 Largest Reinsurers With Swiss Re at No. 2: AM Best

Munich Re holds onto the top spot in AM Best’s annual ranking of the top 50 global reinsurance groups for 2022, with Swiss Re coming in as the second-largest reinsurer — for the third year in a row.

These two reinsurers account for one-quarter of the top 50 reinsurance gross premiums written in 2022, up from 24.3% in 2021, which AM Best said is particularly notable given the euro’s depreciation.

Total gross reinsurance premiums written by the top 50 groups increased by 2.6% to US$363.6 billion in 2022, from US$354.4 billion in 2021, said the ratings agency, explaining that premium growth for many reinsurers was primarily driven by strong rate increases, rather than exposure growth. (See chart below. Click on the image to enlarge it).

Exhibit 1 in AM Best’s report titled “World’s 50 Largest Reinsurers”

“Nevertheless, global investment market turmoil and more frequent and severe global catastrophe losses, compounded by severe secondary peril losses, resulted in many reinsurers failing to meet their cost of capital in recent years,” said the report titled “World’s 50 Largest Reinsurers.”

The No. 3 and 4 spots in the ranking – Hannover Re and Canada Life Re, respectively – were unchanged from their positions from 2021. At the same time, Berkshire Hathaway moved up one spot to fifth place – driven partially by its acquisition of Alleghany Corp. – which pushed SCOR to sixth place. The four largest reinsurers at year-end 2022 were ranked the same as in 2021.

Ranked at No. 7 on the list, Lloyd’s saw a small premium decline, although it was mainly driven by the 10.1% depreciation of the pound agains the US dollar. At constant exchange rates for the current and prior year, GPW grew approximately 7.2%, AM Best explained. (Lloyd’s is No. 4 on the list of non-life reinsurance groups. See exhibit 3 below).

“The 10 largest reinsurers on the list accounted for 69.4% of total reinsurance GPW, up from 67.9% at year-end 2021, and slightly higher than the 68.55 at year-end 2020,” the report continued. “Despite this concentration, the global reinsurance market remains highly competitive.” (See exhibit 2).

Exhibit 2 in AM Best’s report titled “World’s 50 Largest Reinsurers”

Rankings Below Top 10

AM Best noted that there was significant movement in the rankings below the top 10, which was “driven primarily by shifts in reinsurance portfolios’ mix, as companies sought to reduce operating performance volatility and balance sheet vulnerability or increase their exposures to certain lines as rates became increasingly attractive.”

The companies with two of the biggest ranking improvements – Odyssey Group Holdings and Allied World Assurance Co. Holdings – have the same parent company: Fairfax Financial Holdings, according to AM Best. Odyssey rose from No. 27 at year-end 2021 to No. 20 in 2022, while Allied World rose from No. 44 to No. 39.

“Odyssey’s GPW grew 30.9%, driven largely by its P/C lines of business in the US, which benefited from new business, expanded relationships with existing clients, and improved pricing,” AM Best continued. Between year-end 2021 and year-end 2022, Allied World’s GPW grew 24.3%, “benefiting from the hard reinsurance market and improved terms and conditions.”

Multiple reinsurers had smaller but still notable movements in the rankings. For example, Tokio Marine rose from No. 38 to No. 34, with GPW increasing 11.6% – a number that was dampened by the 8.0% depreciation of the Japanese yen against the US dollar. However, when using foreign exchange rates consistent with year-end 2021, AM Best said that non-life GPW rose 21.5% year-on-year.

Five companies moved up three positions:

Arch rose from No. 17 to No. 14, driven by 36.4% growth in non-life GPW;
MS&AD moved from No. 18 to No. 15, driven by 17.3% growth in non-life GPW (despite being dampened by the 8.0% depreciation of the yen);
Sompo International Holdings moved from No. 20 to No. 17, driven by 6.9% GPW growth;
MAPFRE Re moved from No. 21 to No. 18 on 3.5% premium growth;
Assicurazioni Generali rose from No. 22 to No. 19 on 4.1% premium growth.

Currency exchange rate fluctuations have a meaningful impact on companies’ rankings, AM Best noted. Those currencies with the greatest dampening effect on global reinsurers’ premium volume in 2022 were the Japanese yen, which depreciated by 8.1% against the US dollar; South Korea’s won, which depreciated by 6.2%; the euro (5.7%); and the Canadian dollar (5.6%).

Cutting Property-Cat Exposure

Bermuda-based Fidelis, which was a new entrant in 2021, dropped out of the top 50 ranking as the company is working to cut its property-catastrophe exposure. “Fidelis had significant property-catastrophe losses in both 2021 and 2022, with a combined ratio over 110 in both years.”

AXA XL, which also has pulled back from property-catastrophe reinsurance as it looks to minimize volatility in its business, has dropped from No. 16 to No. 21 in the rankings, AM Best said.

Notable Changes, New Entries

Looking forward, AM Best expects “Renaissance Re will have a notable ranking change once its acquisition of Validus from AIG is completed.” In combination, the two entities had gross life and non-life premiums written of US$12.3 billion at year-end 2022, which would be ranked No. 10.

AM Best said two new reinsurers entered the top 50 list this year – Convex Group and Core Specialty Insurance Holdings, ranked at No. 40 and No. 44, respectively.

Convex, the Bermuda-based specialty re/insurer, was founded in 2019, while Core Specialty, the newly recapitalized carve-out of StarStone, was launched in December 2020, “following extensive expansion of equity funding and new executive hires.”

Non-Life Rankings

Commenting on trends in global non-life reinsurance groups, AM Best noted that Hannover Re overtook Swiss Re in the No. 2 position after nearly tripling Swiss re’s non-life premium growth.

The top 15 global non-life groups are Munich Re, Hannover Re, Swiss Re, Lloyd’s, Berkshire Hathaway, SCOR, Everest Re Group, RenaissanceRe Holdings, China Reinsurance (Group) Corp., PartnerRe, Arch Capital Group, Korean Reinsurance Co., General Insurance Corp. of India, Sompo International Holdings and Odyssey Group Holdings. (See exhibit 3 below).

Exhibit 3 in AM Best’s report titled “World’s 50 Largest Reinsurers”

Most of the changes in non-life rankings were seen in companies between No. 11 and No. 15 on the list, AM Best confirmed. For example, Arch Capital rose from No. 15 to No. 11, displacing Korean Re, which fell slightly from No. 11 to No. 12.

“Two companies included in last year’s top 15 fell off the list this year: AXA XL, which pulled back from property catastrophe reinsurance, and Transatlantic Holdings Inc., which was consolidated into Berkshire Hathaway,” according to the ratings agency.

The new entrants to the top 15 non-life list include Odyssey Group, ranked at No. 15, and Sompo International, ranked at No. 14.

Methodology

AM Best explained that only year-end gross reinsurance premiums written are calculated, eliminating any primary premiums, in order to isolate a reinsurer’s business profile. Rankings prior to 2021 had included primary premiums that were less than 25% of a reinsurers’ total premium volume.

“To obtain the most accurate figures possible, we make a number of assumptions and adjustments as we navigate through different financial statements, accounting standards, and segment reporting. Capturing only third-party business and excluding affiliated or intragroup reinsurance are perhaps the most essential adjustments,” AM Best said.

All reporting currencies are converted to US dollars, using the foreign exchange rate as of the date of the companies’ financial statements.

Related:

Topics Reinsurance AM Best Swiss Re

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