Am Re Profit Down Sharply, Hurt By CAT Losses

NU Online News Service, Nov. 8, 4:23 p.m. EST? American Re Corporation, a Princeton, N.J.-based unit of Munich Re, posted sharply lower third-quarter profit, which dropped to $6.8 million from $55 million reported during the year-ago quarter.[@@]

The company blamed unusually high catastrophe losses and prior-period loss developments for its lackluster results.

The company said its catastrophe losses for the third quarter came in at $165.9 million, much higher than $10.2 million reported during the year-ago quarter. These CAT losses ended up adding 19.8 points to the combined ratio of core business units, compared to just 1.2 points one year ago. American Re stated that its third-quarter earnings were also dragged down by prior-period loss development of $102.7 million, which was higher than $67.2 million posted during the corresponding quarter one year ago.

Gross written premiums for American Re was $1.17 billion for the third quarter, up 1.3 percent from one year ago. American Re's combined ratio for the quarter came in at 126.1, deteriorating from 98.7 during the year-ago quarter. The accident-year combined ratio for American Re's core business units was 116.1 for the quarter, compared to 92.2 percent one year ago.

American Re Chief Executive John Phelan described his company's catastrophe losses as being "in line with our expectations," considering the series of losses of the magnitude experienced.

"Current underwriting performance is satisfactory and reflects American Re's continued commitment to disciplined underwriting so that we can provide our clients with the strongest financial security possible," Mr. Phelan said.

American Re writes treaty and facultative reinsurance as well as primary insurance, and provides related services to insurance companies, other large businesses, government agencies, pools and other self-insurers in the United States.

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Am Re Profit Down Sharply, Hurt By CAT Losses

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