Aon has published the report of a 2003 study by Oxford Metrica, analyzing the performance of the global (re)insurance market over the year following the World Trade Center catastrophe, using published data from the year-end 2001 annual statements. OM analyzed market value and premium writings of 484 publicly reporting insurance firms, with a combined market value of over US$1,061.3 billion. They found that 80% of the market value of the global general insurers and reinsurers lies in 20% of such companies. Shareholder Value Analysis of the Global (Re)insurance Industry (More follows)
The 53 companies that wrote global non-life insurance had a combined market value of US$542.4 billion (51% of the total value of the 484). OM focused on the 25 (with their subsidiaries) that accounted for 97% of the total value of the 53. OM's published data, for each of the 25 focus companies included:
1) Market Cap
2) Gross Written Premium
3) Total Net Premiums
4) Assets & Liabilities
5) Estimated Claims Relating to Cat 9/11
6) Cash available at 12/31/01
OM's table of market capitalization data showed, as of February 2003:
* 19% of the 53 global insurers had 83% of their combined market value;
* AIG had 28.9%, and Berkshire Hathaway had 20.4% of the combined market value of the 53.
* Number three's value was dramatically less at 6.4% of the share.
The top 25's premiums, assets and liabilities showed less market concentration:
* 20% had about 50% of the premiums
* 20% had about 70% of the assets
* 20% had about 70% of the liabilities.
(These percentages are based upon visual estimates from OM's graphical data.)
OM looked at the stock market reaction to each of the 25 following the 9/11 catastrophe, separating them into "recoverers" and "non-recoverers." OM noted that the larger firms tended to dominate the "nonrecoverers" group, compared to the smaller, "newer" firms with lower exposure to substantial historic liability claims such as asbestos.
The study provided some numerical data and views regarding insurance industry issues relating to asbestos and environmental liabilities, Enron and the expensing of stock options. It described the creation of almost 100 new (re)insurance companies in the insurance regulatory haven of Bermuda, funded with about US$13 billion of new capital since 9/11. OM also sketched Catastrophe 9/11 impacts on Lloyds of London and the Japanese insurance market, which reacted with insurance bankruptcies, mergers and alliances. OM noted that mergers of large firms in Japan have reduced 23 non-life companies to "6 mega insurance groups that would control collectively over 80% of the (Japanese) insurance industry's total premiums. * * * [T]he three top companies * * * hold 65% of the Japanese market."
The study was commissioned by Aon Limited, London and performed by Oxford Metrica, Oxford.
Contact information is in the full report: Shareholder Value Analysis of the Global (Re)insurance Industry
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Posted by dougsimpson at August 26, 2003 05:00 PM | TrackBack