“The underwriting results indicate that the premium increases seen in 2000 and year-to-date, which have been significant across-the-board, are not yet sufficient to bring this industry back into profitability,” said Don Watson, director of insurance ratings for Standard & Poors in New York. For some companies, Tropical Storm Allison affected results during the second quarter, while many are being impacted by under-pricing between 1997 and 2000, he said.

During the first six months of 2001, the 30 RAA companies wrote $13.5 billion of net reinsurance premiums, up about 9 percent compared with $12.3 billion for the same period last year.

However, net income for the first six months of 2001 came to approximately $485 million, down from $549 million for the same period last year, the RAA said. A big culprit is net realized capital gains, with the 30 RAA companies reporting a total of $281 million for the first half of 2001, down about 17.5 percent from $341 million for the first half of 2000.

Mr. Watson said he expects premium growth for the full year of slightly more than 15 percent for the U.S. reinsurance industry, which will be almost entirely derived from rate increases.

The actual rate increases are probably averaging in excess of 20 percent, but premium volume is not growing by that much because some companies are “falling off of some treaties,” he said.

He predicted that the combined ratio would improve by the end of the year, but not by much. Depending on catastrophe losses for the rest of the year, its unlikely that the U.S. industry will break 110, he said. “I think it will be better than the 115 reported here, but my guess is that it will be around 112,” he added.

He noted that two companies of the big four in the U.S. market are showing reasonable results. American Re has a combined ratio for the half of 107.2, while Employers Re has a combined ratio of 108.6.

However, the two largest companies–General Re and Swiss Re–are “producing results that are at the bottom of the industry,” he added. “Until the lead players exercise underwriting discipline, this market cant effectively turn around.” General Res combined ratio is at 119.4, while Swiss Res is at 127.1.

An alphabetical selection of combined ratios for RAA companies include:

American Re-Insurance Company, with a combined ratio of 107.2 for the first six months of 2001, compared with 116.9 for the same period last year.

Axa Corporate Solutions Reinsurance Company, 110.5 for the first half of 2001, compared with 110.6 for first-half 2000.

Berkley Insurance Company, 106.4 for the first six months, compared with 103.6 last year (when it was called Signet Star Reinsurance Company).

CNA Re, with a combined ratio of 300.5, compared with 109.0 last year. (For comparison purposes with last year, CNA Res figures include non-U.S. affiliates. In a footnote, the RAA survey explains that CNA Res high combined ratio for the second quarter relates to “continued emergence of adverse loss experience across several lines of business, prompting the company to significantly strengthen its loss reserves.” The footnote went on to say that the reserve strengthening relates mainly to accident years 1997-2000.

Employers Reinsurance Corp., with a combined ratio of 108.6, compared with 113.0 last year.

Everest Reinsurance Company at 104.9, compared with 104.2 last year.

Folksamerica Reinsurance Company at 111.0, compared with 109.5 last year.

General Re Group at 119.4, compared with 112.3 last year.

Gerling Global Reinsurance at 116.5, compared with 113.0 last year.

Hartford Re Company at 113.2, compared with 104.9 last year.

Odyssey America Reinsurance Corp. at 101.5, compared with 107.8 last year.

Overseas Partners US Reinsurance Company at 108.0. (A comparison with last year cannot be made because the company is new.)

Partner Re U.S. at 108.4, compared with 113.9 last year.

PMA Capital Insurance Company at 113.8, compared with 101.0 last year.

PXRE Reinsurance Company at 103.5, compared with 187.1 last year.

QBE Reinsurance Corp. (formerly Sydney Re) at 106.8, compared with 106.3 last year.

SCOR U.S. Group/SCOR Reinsurance Company at 107.9, compared with 143.0 last year.

Sorema North America Group at 128.9, compared with 120.7 last year. (SCOR has completed its purchase of Sorema.)

St. Paul Re at 104.9, compared with 118.5 last year. (St. Pauls combined ratio includes U.S. and non-U.S. affiliates for purposes of comparison. The companys U.S. statutory results exclusively would come to a combined ratio of 115.0 for the first six months of 2001.)

Swiss Reinsurance America Corp. at 127.1, compared with 115.5 last year.

Transatlantic Re Company/Putnam Re Company at 101.5, compared with 101.1 last year.

Trenwick America Corp. at 130.8, compared with 113.1.

Zurich Reinsurance (North America) Inc. at 102.2, compared with 102.3.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

Contact Webmaster