In this piece, we will take a look at the 20 biggest reinsurance companies in the world. For more reinsurance companies head on over to 5 Biggest Reinsurance Companies in the World.
Insurance is one of the oldest industries in the world, with the first evidence of protection against payment in case of a natural hazard being found thousands of years back. Since then, the sector has vastly evolved and uses complicated mathematical models to determine the extent to which firms that offer insurance have to keep resources available to meet claims in case of a potential drawdown.
Before we get into the specifics of how insurance companies work their magic, it's first important to take a look at fresh developments in the American economy. The Federal Reserve has been on an aggressive interest rate hiking cycle since last year, and the latest policy meeting which took place in May 2023 finally signaled that the recent era of pain for investors and bankers just might be over. The Fed's chairman, Mr. Jerome Powell, announced another 25 basis point (0.25%) hike in interest rates, but crucially, toned down the hawkish approach that he has taken for the past twelve months. Chairman Powell stressed that his bank is responsible for reducing inflation by price stability, yet he also cautioned that long term expectations of high inflation appear to be entrenched in the market. However, in a respite for those listening in, he also shared:
In addition, the economy is likely to face further headwinds from tighter credit conditions. Credit conditions had already been tightening over the past year or so in response to our policy actions and a softer economic outlook. But the strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses. In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.
In light of these uncertain headwinds, along with the monetary policy restraint we have put in place, our future policy actions will depend on how events unfold. In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. We will make that determination meeting by meeting, based on the totality of incoming data and their implications for the outlook for economic activity and inflation. And we are prepared to do more if greater monetary policy restraint is warranted.
In short, the Federal Reserve will not look to increase rates as a predetermined outcome regardless of economic variables, and according to the chairman, the bank will first see how the economy is responding to the 5% interest rate hikes and then determine if future rate hikes are warranted. As a final caveat though, the Federal Reserve's Monetary Policy Committee has not officially decided to pause the interest rate hike.
But how do interest rates affect the insurance industry? Well, insurance companies, like banks, invest their money into bonds. Bond yields and prices are affected by interest rates, with bonds issued at lower rates seeing their prices drop as the rates rise and vice versa. So, this back and forth between new bonds offering better rates and old bonds seeing their prices drop also affects insurers. On one end, the insurance companies can invest in new bonds and improve their returns while on the other, they might have to sit on low rate bonds for a while before they mature.
Building on this, research from the Treasury Department shows that inflation is another macroeconomic metric that weighs down on insurers. It reveals that even though higher interest rates enable the insurance companies to favorably position their portfolio for higher returns, higher inflation also tends to increase the number of claims made for home, vehicle, and other insurances as price growths make more people turn to the insurers to bail them out.
Combining these two principles, i.e. higher rates making it difficult to generate funds by selling older bonds and high rates increasing the burden of claims, what do the insurance companies do to protect themselves? One strategy for this is reinsurance, which, simply put, is insurance for the insurance company. Reinsurance sees insurers pool their funds together to buy policies from other insurers. For instance, while one firm might insure all car owners in a small town, it will share the risks with others and pay them the premiums received to buffer against some of the risks of an unexpected all out claims event.
Naturally, this makes reinsurance quite a lucrative market. Research from The Business Research Company shows that the reinsurance market was worth $574 billion in 2022 and it will grow to $632 billion by the end of this year at a compounded annual growth rate (CAGR) of 10.1%. From 2023 until 2027, the research firm believes that the industry will grow at a 9.1% CAGR and sit at $895 billion by the end of the forecast period. The research firm adds that Western Europe was the largest reinsurance market in the world last year, a fact that will also become clear once you go through our list of the world's largest reinsurance companies.
With these details in mind, let's take a look at some of the biggest reinsurance companies in the world.
To compile our list of the biggest reinsurance companies in the world, we used data from A.M. Best's compilation of the largest reinsurance companies in the world ranked by their gross premiums in 2021.
Biggest Reinsurance Companies in the World
20. Sompo International Holdings, Ltd.
Gross Reinsurance Premiums Written in 2021: $3.8 billion
Sompo International Holdings, Ltd. is a reinsurance company based in Hamilton, Bermuda. The firm is primarily a Japanese property and casualty insurance provider but it has a vast global presence with operations in 30 countries and 228 cities. Along with Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (ETR:MUV2.DE), Swiss Re AG (OTCMKTS:SSREY), and Hannover Rück SE, it is one of the biggest reinsurance companies in the world.
19. Pacific LifeCorp
Gross Reinsurance Premiums Written in 2021: $4 billion
Pacific LifeCorp is one of the oldest companies on our list. The firm has been operating since 1868, and it is a subsidiary of the Pacific Mutual Holding Company. Like others, Pacific LifeCorp's reinsurance division Pacific Life Re has a global presence with operations in Europe, North America, and other regions.
18. MS&AD Insurance Group Holdings, Inc. (OTCMKTS:MSADY)
Gross Reinsurance Premiums Written in 2021: $4.39 billion
MS&AD Insurance Group Holdings, Inc. (OTCMKTS:MSADY) is a Japanese firm headquartered in Tokyo. It is one of the largest companies in Japan and part of the Nikkei 225 index. The firm was set up in 1918 and it offers other insurance products as well alongside reinsurance services.
17. Arch Capital Group Ltd. (NASDAQ:ACGL)
Gross Reinsurance Premiums Written in 2021: $4.39 billion
Arch Capital Group Ltd. (NASDAQ:ACGL) is an insurance company headquartered in Pembroke, Bermuda. The firm's reinsurance division covers a variety of industries such as aviation, agriculture, and property.
As of Q4 2022, 25 of the 943 hedge funds part of Insider Monkey's database had bought Arch Capital Group Ltd. (NASDAQ:ACGL)'s shares. Out of these, the largest shareholder is Bob Peck and Andy Raab's FPR Partners with a $361 million stake.
16. AXA XL
Gross Reinsurance Premiums Written in 2021: $5.48 billion
AXA XL is the American subsidiary of the reinsurance firm AXA. The firm has more than a hundred offices all over the world and is headquartered in Stamford, Connecticut. It also has an office in Houston and calls itself one of the largest property and casualty reinsurers in the world.
15. General Insurance Corporation of India (NSE:GICRE.NS)
Gross Reinsurance Premiums Written in 2021: $5.82 billion
General Insurance Corporation of India (NSE:GICRE.NS) is India's only reinsurer in the domestic market - placing significant demand at its doorstep. The firm also has operations in the U.K., Russia, South Africa, and other countries.
14. Transatlantic Holdings, Inc
Gross Reinsurance Premiums Written in 2021: $6.0 billion
Transatlantic Holdings, Inc is a relatively younger company on our list since it was set up in 1977. The firm is headquartered in New York, and it is owned by Alleghany Corporation.
13. Korean Reinsurance Company (KRX:003690.KS)
Gross Reinsurance Premiums Written in 2021: $7.15 billion
Korean Reinsurance Company (KRX:003690.KS) was set up in 1963 and is headquartered in Seoul, South Korea. The firm provides life and non life reinsurance products to a variety of industries.
12. RenaissanceRe Holdings Ltd. (NYSE:RNR)
Gross Reinsurance Premiums Written in 2021: $7.83 billion
RenaissanceRe Holdings Ltd. (NYSE:RNR) is headquartered in Pembroke, Bermuda. It provides property and casualty reinsurance products.
26 of the 943 hedge funds profiled by Insider Monkey had bought RenaissanceRe Holdings Ltd. (NYSE:RNR)'s shares in Q4 2022. The firm's largest shareholder is Brian Ashford-Russell and Tim Woolley's Polar Capital with a $202 million stake.
11. PartnerRe Ltd. (NYSE:PRE-PJ)
Gross Reinsurance Premiums Written in 2021: $8.20 billion
PartnerRe Ltd. (NYSE:PRE-PJ) is a global reinsurance provider headquartered in Pembroke, Bermuda. It provides property, casualty, life, and health reinsurance.
10. Everest Re Group, Ltd. (NYSE:RE)
Gross Reinsurance Premiums Written in 2021: $9.0 billion
Everest Re Group, Ltd. (NYSE:RE) is a reinsurance company headquartered in Hamilton Bermuda with reinsurance operations in the U.S., U.K., Singapore, and other countries.
As of December 2022, 30 of the 943 hedge funds part of Insider Monkey's database had bought Everest Re Group, Ltd. (NYSE:RE)'s shares. The firm's largest investor is John Armitage's Egerton Capital Limited with a $148 million stake.
9. Reinsurance Group of America, Incorporated (NYSE:RGA)
Gross Reinsurance Premiums Written in 2021: $13.35 billion
Reinsurance Group of America, Incorporated (NYSE:RGA) is an American firm that provides health and life reinsurance products.
Insider Monkey dug through 943 hedge funds for their fourth quarter of 2022 investments and found that 34 had invested in the firm. Natixis Global Asset Management's Harris Associates is the largest investor since it owns $376 million worth of shares.
8. China Reinsurance (Group) Corporation (HKG:1508.HK)
Gross Reinsurance Premiums Written in 2021: $17.80 billion
China Reinsurance (Group) Corporation (HKG:1508.HK) is a Chinese firm set up in 1949 and headquartered in Beijing. It offers property, casualty, life, and health reinsurance products.
7. Lloyd's of London
Gross Reinsurance Premiums Written in 2021: $19.34 billion
Lloyd's of London is one of the oldest companies on our list, set up a whopping 335 years ago. It offers reinsurance in more than 200 countries and territories.
6. Berkshire Hathaway Reinsurance Group
Gross Reinsurance Premiums Written in 2021: $19.91 billion
Berkshire Hathaway Reinsurance Group is the largest reinsurance company in America and part of Warren Buffett's Berkshire Hathaway Inc. (NYSE:BRK-A).
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Disclosure: None. 20 Biggest Reinsurance Companies in the World is originally published on Insider Monkey.