Reinsurance Carriers
Description
Companies in this industry provide insurance to other insurance companies to assume the risk on existing policies as a hedge against catastrophic loss. Major companies include Everest Re, Reinsurance Group of America, and TransRe (all based in the US), as well as Munich Re (Germany), SCOR (France), and Swiss Re (Switzerland).
The global reinsurance industry is forecast to reach about $545 billion in 2035, at a compound annual growth rate (CAGR) of 4.5%, according to Future Market Insights. Demand for insurance, and therefore reinsurance, has increased in the last few years, driving global expansion of the insurance business.
The US reinsurance carriers industry includes about 400 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $65 billion.
COMPETITIVE LANDSCAPE
Demand is driven by the volume of insurance policies written and the size of insurance companies' risk portfolios. The profitability of individual companies depends on the ability to balance premium and investment income against claim payouts. Large companies have advantages in serving customers in diverse geographic areas and product categories. Smaller companies can compete effectively by providing coverage for specialized insurance markets. The US industry is highly concentrated: the 50 largest firms account for nearly 100% of revenue.
Consolidation has intensified competitive pressure in the industry, as larger players are better able to offer broader and more diversified coverage. Reinsurance firms also competition from financial service providers that provide alternatives to traditional reinsurance backed by alternative capital sources.
PRODUCTS, OPERATIONS & TECHNOLOGY
Reinsurance companies typically assume all or part of the risk associated with property/casualty, medical, life, and other types of insurance policies originally underwriter by other insurance companies. Premiums assumed from property/casualty reinsurance account for about 60% of US industry revenue. Life and health reinsurance, which accounts for about 30% of revenue, includes whole, term, and universal life policies; annuities; and group and individual health care coverage.
Reinsurance is written on a treaty (block of policies) or facultative (individual policy) basis. Treaty reinsurance, also known as automatic reinsurance, covers risks on specified blocks of policies that meet the ceding company's underwriting criteria. Facultative reinsurance is issued for unusual risks or liabilities that exceed the binding limits of automatic treaties.
Insurers purchase reinsurance policies to reduce the possible maximum loss on risks by giving (ceding) a portion of the liability to another insurance company. The protection allows insurers to expand insurance volumes, secure against catastrophic losses, stabilize underwriting results, and share risks among other insurance companies.
Reinsurance companies collect premiums from customers and invest those funds in stocks or other vehicles. Companies must ensure that funds are available to meet insurance and reinsurance obligations, as well as to maximize after-tax investment income. For public companies, investments are also funded by shareholder equity. Net investment income typically accounts for 10-20% of revenue.
The global reinsurance industry is forecast to reach about $545 billion in 2035, at a compound annual growth rate (CAGR) of 4.5%, according to Future Market Insights. Demand for insurance, and therefore reinsurance, has increased in the last few years, driving global expansion of the insurance business.
The US reinsurance carriers industry includes about 400 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $65 billion.
COMPETITIVE LANDSCAPE
Demand is driven by the volume of insurance policies written and the size of insurance companies' risk portfolios. The profitability of individual companies depends on the ability to balance premium and investment income against claim payouts. Large companies have advantages in serving customers in diverse geographic areas and product categories. Smaller companies can compete effectively by providing coverage for specialized insurance markets. The US industry is highly concentrated: the 50 largest firms account for nearly 100% of revenue.
Consolidation has intensified competitive pressure in the industry, as larger players are better able to offer broader and more diversified coverage. Reinsurance firms also competition from financial service providers that provide alternatives to traditional reinsurance backed by alternative capital sources.
PRODUCTS, OPERATIONS & TECHNOLOGY
Reinsurance companies typically assume all or part of the risk associated with property/casualty, medical, life, and other types of insurance policies originally underwriter by other insurance companies. Premiums assumed from property/casualty reinsurance account for about 60% of US industry revenue. Life and health reinsurance, which accounts for about 30% of revenue, includes whole, term, and universal life policies; annuities; and group and individual health care coverage.
Reinsurance is written on a treaty (block of policies) or facultative (individual policy) basis. Treaty reinsurance, also known as automatic reinsurance, covers risks on specified blocks of policies that meet the ceding company's underwriting criteria. Facultative reinsurance is issued for unusual risks or liabilities that exceed the binding limits of automatic treaties.
Insurers purchase reinsurance policies to reduce the possible maximum loss on risks by giving (ceding) a portion of the liability to another insurance company. The protection allows insurers to expand insurance volumes, secure against catastrophic losses, stabilize underwriting results, and share risks among other insurance companies.
Reinsurance companies collect premiums from customers and invest those funds in stocks or other vehicles. Companies must ensure that funds are available to meet insurance and reinsurance obligations, as well as to maximize after-tax investment income. For public companies, investments are also funded by shareholder equity. Net investment income typically accounts for 10-20% of revenue.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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