SFCRs reveal reinsurance 'mixers' as big as reinsurers

Published in: Risk, Risk management, Capital, Capital management, Reinsurance, UK, Rest of Europe

Companies: Lloyd's, HDI Global SE, Münchener Rückversicherungs-Gesellschaft, Munich Re, Allianz SE, Aviva International Insurance, Hannover Re (Ireland) DAC, Scor Global P&C SE

The internal reinsurance entities for Allianz and Aviva have reached a scale similar to that of the EU's largest reinsurers, according to analysis of solvency and financial condition reports (SFCRs) by Insurance Risk Data.

Driven by the introduction of Solvency II, Allianz and Aviva are among groups that have established internal reinsurers or 'mixers' to pool risk and take advantage of diversification benefits available under the regulation.

These mixers help reduce the capital requirements for subsidiaries and improve the fungibility of capital across groups.

SFCR data on 2017 income from proportional reinsurance of fire and property damage revealed Aviva International Insurance Limited (IIL) brought in £1.1bn ($1.5bn) while Allianz SE took in €2.7bn ($3.2bn).

This ranked them in the top six proportional property reinsurance entities in Europe, alongside Münchener Rückversicherungs-Gesellschaft (€3.7bn), a unit of Munich Re, Lloyd's of London (£1.8bn), Scor Global P&C SE (€835m) and Hannover Re (Ireland) DAC ($517m).

Aviva's entity has a 50% quota share arrangement with its general and health business in the UK and Ireland; its UK annuity, life and pensions operations; and its French general and health insurance unit.

Allianz SE has reinsurance arrangements with various group subsidiaries including Allianz S.p.A in Italy, France's Allianz IARD, Allianz Benelux SE in Belgium, and Euler Hermes Re AG in Switzerland.

Insurance Risk Data, the data service from InsuranceERM, derived the figures from the entities' quantitative reporting templates.

A year-on-year comparison revealed that Lloyd's, Scor Global P&C SE, HDI Global SE and Allianz GCS did better in 2017 than 2016.

But Allianz SE and Aviva IIL fell short of their 2016 income, mainly because 2016's figures were boosted by the inclusion of back-books as well as new business.

Proportionately, Lloyd's figure for 2017 jumped the most (18%), though the proportion of the overall premium income it earned from reinsurance (32%) barely moved (2016: 31%).

 Figure 1: Proportional Reinsurance Accepted, Fire and Other Property Damage (€ million)

  •  All SFCRs and QRTs are available from InsuranceERM as part of our Insurance Risk Data service. This service combines European insurers' financial and regulatory filings, including the new Solvency II disclosures, into a single, comprehensive and user-friendly database ideal for market/peer analysis, research and benchmarking. To find out more please email phil.manley@fieldgibsonmedia.com

David Walker