Bermuda Reinsurers Net Withstands Storms

By Michael Ha

NU Online News Service, Dec. 6, 4:05 p.m.EST?Despite a record number of hurricanes and typhoons inthe third quarter, global and Bermuda-based reinsurers reportedlittle or no damage to their balance sheets, according to a newreport.[@@]

According to Benfield Group Limited's "Bermuda QuarterlyReport," total net income among Bermuda reinsurers for the firstthree quarters totaled $3.3 billion, down 26 percent when comparedto the same period one year ago.

However, the report noted that only threecompanies?RenaissanceRe, Quanta and PXRE?have reported negativeresults and only five?RenaissanceRe, Quanta, PXRE, Max Re andAWAC?reported combined ratios higher than 100 during first ninemonths of this year.

The average combined ratio for the three quarters of 2004 was95.6, compared to 88.4 for the same period in 2003.

"Strong earnings from previous quarters and profitablenon-catastrophe exposed business in the third quarter weresufficient to absorb storm losses," noted Chris Klein, fromBenfield Group's Industry Analysis and Research team, whichprepared the report. "The lack of damage to balance sheets suggeststhat a positive or stabilizing effect on pricing is likely to bemuted except for directly affected areas."

Looking ahead, the Benfield report forecast that the catastrophelosses experienced in the third quarter, which are already at thetop of the historical range, may slow and stabilize the decline incatastrophe pricing. In the short term, however, with reinsurers'balance sheets still intact and robust, rates could still beexpected to decline outside the storm-affected regions in theforthcoming renewal season and into 2005.