Global reinsurer capital was down by 3% to $455bn (£286bn) last year, according to the Aon Benfield Aggregate analytics report, but the sector has been described as remaining strong.
The firm's latest annual study found that capital reported by the ABA group of 28 leading reinsurers reached an all-time high of $251bn at the end of 2011 - an increase of 1.7% or $4.2bn from the end of 2010.
A reduction of 3.4% in the first quarter of 2011 was replaced by growth of 1.7%, 1.1% and 2.3% in the three subsequent quarters.
The primary contributors to ABA capital growth were net income of $11.7bn and unrealised capital gains of $5bn. The main offsetting factors were dividends and share buybacks totaling $13.7bn.
Across the ABA as a whole, return on average common equity declined from 10.4% in 2010 to 4.6% in 2011, driven by the higher level of catastrophe losses and the relative absence of realised and unrealised investment gains.
Mike Van Slooten, head of Aon Benfield's international market analysis team, said: "The reinsurance sector remains strong after a testing year in 2011 and continues to provide very efficient underwriting capital to insurers.
"The volatility sustained by reinsurers was substantial and materially improved the earnings and capital reported by insurers affected by unusual frequency and severity of events occurring in 2011. The value proposition of reinsurance has rarely been so clearly demonstrated."
Elsewhere, the annual study recorded gross property and casualty premiums written increases of 11% to $136bn with contributory factors including acquisitions, reinstatement premiums and organic growth in certain primary insurance lines.
