Benfield: Investments Boost Reinsurance Sector For '04
NU Online News Service, May 19, 10:20 a.m. EDT?European reinsurers' 2003 results showed a generally strong level of underwriting performance, but net profits failed to meet expectations at the beginning of the year because of weak investment results, according to a leading independent reinsurance intermediary.[@@]
In 2004, however, London-based Benfield said it sees an improved profit outlook underpinned by a more "benign investment environment." But it warned this forecast is "tempered by signs of emerging price competition and the continuing specter of reserve strengthening."
Benfield said that strict underwriting discipline restrained premium growth that showed favorable pricing trends. The weaker United States dollar, it said, depressed nominal growth areas of companies reporting in Euros and Swiss francs. Swiss Re, Benfield said, achieved the strongest growth at 25 percent at constant exchange rates.
The favorable trends in pricing persisted through the January 2004 renewals, with most companies increasing writings of lines such as U.S. casualty, Benfield said.
The report stated that higher retentions by ceding companies and few severe catastrophes during 2003 reduced the catastrophe loss burden for insurers, despite an increase in aggregate insured losses.
Combined ratios were below 100 percent with improvement for all except The SCOR Group. The SCOR combined ratio was held at 123 percent, forcing the company into a second emergency rights issue in 12 months. Reserve additions were made at Munich Re and Swiss Re for the first time in recent years, the report noted.
As for premium income, the study found that a weaker U.S. dollar had a significant impact on the premium income of European reinsurers.
Swiss Re, the highest of the group, reported a 25 percent increase in earned premiums at constant exchange rates in both its property-casualty and financial services business groups?normal growth rate in these units are 16 percent and 14 percent, the report said.
Alea Group reported a 40 percent change in gross non-life premiums, and Converium reported a 20 percent growth, the report said.
Pricing trends, the report said, were generally favorable throughout the year, with companies noting the maintenance of discipline in the face of weak financial markets. Many companies took advantage of the especially favorable terms to increase their writing of long-tail business, the report said.
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