IFRS 17 sparks changes in 2023 global reinsurance rankings
IFRS 17 sparks changes in 2023 global reinsurance rankings | Insurance Business New Zealand
Reinsurance
IFRS 17 sparks changes in 2023 global reinsurance rankings
New standards shift focus to revenue, reshaping the list
Reinsurance
By
Kenneth Araullo
The introduction of IFRS 17 accounting standards in the insurance industry has necessitated changes to AM Best’s annual ranking of top reinsurance groups for 2023.
According to the report, this shift was driven by the need to address the lack of comparability brought about by IFRS 17, which changes the traditional focus from premiums written and earned to insurance revenue, reflecting the amount earned by insurers for services provided.
In the updated ranking, companies reporting under IFRS 17 are ranked based on gross reinsurance revenue, while those reporting under non-IFRS 17 standards are ranked based on gross written reinsurance premium.
This year’s rankings place Munich Reinsurance Co. as the largest IFRS 17 reporter, with nearly $32.9 billion in 2023 reinsurance revenue. It is followed by Hannover Rück SE with $27.0 billion and SCOR SE with $17.6 billion.
Among non-IFRS 17 reporters, Swiss Re Ltd. leads with $40.5 billion in gross premium written, followed by Berkshire Hathaway, Inc. with $27.5 billion and Lloyd’s with $22.1 billion.
The report also reflects on the evolution of AM Best’s annual global reinsurance report over the past two decades, highlighting significant developments and market trends. While changes in the rankings have typically been modest, the adoption of IFRS 17 has prompted a noticeable shift in this year’s list.
Carlos Wong-Fupuy, senior director at AM Best, noted that the analysis has evolved to ensure the rankings remain relevant.
The report further details the financial performance of the global reinsurance market, noting that the industry had not met its cost of capital for several years leading up to 2023. In 2022, a sharp increase in the risk-free rate significantly raised the cost of capital for reinsurers, which, combined with worsening market pressures, led to improved underwriting performance in 2023.
As a result, combined ratios across the industry declined, with the average combined ratio for GAAP or equivalent companies dropping from 100.9% in 2022 to 92.2% in 2023. Improved underwriting results also contributed to growth in capital for these companies, with shareholders’ equity rising 19.5% in 2023.
Berkshire Hathaway was the largest contributor to this growth, with its equity increasing by 18.1%, from $480.6 billion to $567.5 billion. IFRS 17 reporters were excluded from this part of the analysis due to the impact of the standard on equity.
This year’s ranking also saw the inclusion of new entrants. Ascot Group Limited, a global specialty insurance and reinsurance group headquartered in Bermuda, debuted at 26th among non-IFRS 17 reporters. Founded in 2001, Ascot expanded into the U.S. markets in 2019, focusing on catastrophe-related risks.
Another new entrant is Ark Insurance Holdings, which ranked 34th among non-IFRS 17 reporters. Founded in 2007, Ark operates through a Lloyd’s platform, specializing in property, casualty, and specialty insurance and reinsurance.
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