Aon Sees Strong Reinsurance Profits on Low Catastrophe Losses

The cohort of reinsurers, called the Aon Benfield Aggregate, kept its combined expense ratio stable at 29%, and its combined ratio for the first nine months of the year, which is a measure of profitability, was 91.2% (over 100% indicates unprofitability). All but one of the reinsurers reported a combined ratio of under 100%.

"Investment income suffered due to lower interest rates and lower yields on comparatively more conservative and shorter-term investment portfolios of reinsurers in the wake of a very uncertain investment valuation environment," Aon said in a statement. "Capital benefited greatly from the material advances in fixed income securities valuations, fueled by renewed confidence in credit quality and improving economic outlooks. Equity market recoveries also contributed to the recovery of reinsurer capital."

High profits and low cat losses this year follow a tumultuous 2008, in which both the financial crisis and Hurricanes Gustav and Ike applied dual pressures to reinsurer balance sheets, drained capital and ultimately impaired profits.