Merger and acquisition activity is expected to remain vigorous.
Los Angeles, CA (PRWEB) April 14, 2012
In the five years to 2012, Global Reinsurance Carriers industry revenue is estimated to grow an annualized 3.6% to $545bn. Reinsurance is a particularly uncertain business and the five years through 2012 represent a good case in point. According to IBISWorld industry analyst Tim Stephen, "The industry's profit margin swung widely due to unpredictable catastrophic losses and manic investment conditions. Most reinsurers emerged from the period with battered balance sheets, but still in robust condition. An industry that specializes in risk management is ultimately well positioned to handle such unprecedented conditions."
Over the past couple of years, some market segments exhibited an upswing in interest, particularly in life insurance as households shifted from wealth accumulation mode to wealth preservation. However, the mass erosion of wealth and the high unemployment levels that occurred have left many households powerless to act on such desires. North America and Europe are the largest net holders of reinsurance risk, collectively accounting for 65% of global reinsurance premiums. Bermuda, the US, Germany, Switzerland, the UK and France are the largest and most sophisticated reinsurance markets. Larger reinsurers, which weathered the financial crisis better than their smaller counterparts, will find themselves in a position to expand rapidly in the next five years, and merger and acquisition activity is expected. Industry major players include Munich Re, Berkshire Hathaway and Swiss Re.
Performance for the industry over the five years to 2017 will be mixed. Stephen adds that "revenue is forecast to expand at a robust rate, however much of this gain will reflect investment revenue returning to more normal levels. Other growth drivers include a recovery in demand within primary markets, which will flow onto reinsurers and an eventual return to market hardening. As was the case in the past five years, growth in emerging markets will continue to outpace that achieved in developed economies. China, India and Brazil will continue to be the stars in the industry, while insurance markets in the Middle East will also maintain rapid development."
The Global Reinsurance Carriers industry is in a mature stage of its economic life cycle. Insurance companies are directing a growing amount of business to the better-capitalized, higher-rated reinsurers. This is leading to a consolidation in the reinsurance industry. In competing with a smaller number of global reinsurers, many reinsurance carriers are finding a large number of global customers asking them to provide a broader range of coverage. In response, reinsurance carriers are expanding the risks they reinsure beyond more traditional business, including risks such as errors and omissions and directors' and officers' exposures. In the 5 years through to 2017 merger and acquisition activity is expected to remain vigorous.
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IBISWorld industry Report Key Topics
Businesses in this industry focus on assuming all or part of the risk associated with existing insurance policies originally underwritten by direct insurance carriers. In other words, the primary activity of this industry is insuring insurance companies.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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