Analysis of Insurance Industry in Singapore

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The other benefits of reinsurance includes:

- Arbitrage – where additional profits can be purchased elsewhere for less than the premium the company collects from policyholders

- Capital management – by passing risks, companies can now avoid having to absorb large losses, which frees up additional capital for investment

- Solvency margins – With surplus relief insurance, companies can accept new clients without the need to raise additional capital

Size and composition of the Reinsurance industry

Global reinsurer capital showed an increasing trend over the last few years. Reinsurance markets as at January 1, 2016 continues to broaden the spectrum of coverage and type of placements they will support.

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2015 was a positive year for growth opportunities, with mortgage, cyber and flood insurance being the key support in primary market development. The mortgage insurance industry has returned to profitability as the pre-crisis portfolios have largely stabilised and the new business written post-crisis is widely considered to be some of the best business in the history of the industry. Most of the reinsurance purchased is driven by new regulatory capital requirements, as government entities Fannie Mae and Freddie Mac continue to access private markets for credit risk transfer. To date, Aon Benfield has placed around USD10 billion of reinsurance capacity in this sector, which equates to approximately USD2.5 billion of projected lifetime ceded premium.

For cyber risk, reinsurance capacity is not only available, but continues to be viewed as a growth area for a fair number of reinsurers. With approximatelyUSD1.7 billion in premium, nearly 90 percent of the market is based in the United States, with annual growth running at 30 to 50 percent. International growth will be driven by upcoming European Union regulations covering data protection that will become effective in 2018. This trend is expected to continue even in 2016