Global reinsurer capital increased 5% to $US595 billion ($787.88 billion) last year, according to reinsurance broker Aon Benfield’s latest report.

Traditional capital grew 4% to $US514 billion ($680.62 billion), while alternative capital increased 13% to $US81 billion ($107.26 billion).

“While expected returns have declined, insurance risk remains attractive to capital markets investors relative to other available opportunities, and low correlation with other asset classes remains a key consideration,” the report says.

Reinsurers are gaining significant benefits from their ability to leverage alternative capital, and are achieving premium growth despite difficult market conditions.

Major losses remained within allocated budgets and, while interest rates are finally rising in the US, investment returns will remain under pressure in the medium term.

Reinsurers’ profitability has declined and growing pressure on earnings “is expected to result in further sector consolidation”.