U.S. Re Sector Posts Improved Underwriting: RAA
By Michael Ha
NU Online News Service, May 24, 3:11 p.m. EDT?The U.S. reinsurance sector has shown an improved overall underwriting performance during the 2004 first quarter, but the four biggest reinsurers still report lackluster underwriting results, according to Reinsurance Association of America data obtained by analysts.[@@]
The Washington, D.C.-based RAA, in a report to be released for public distribution Friday, said first-quarter combined ratio for the overall reinsurance sector improved to 94, down from the 96.4 reported a year earlier?while net written premiums for the sector fell 9 percent year-over-year to $7.8 billion, mostly reflecting market withdrawals of several RAA members.
During the quarter, policyholders' surplus grew to $56.2 billion, versus $55.9 billion during the 2003 fourth quarter.
Regarding the four largest U.S. reinsurers?Munich Re's unit American Re, Berkshire Hathaway's General Re, Swiss Re and Employers Re?their first-quarter underwriting results fell below the industry average, with only General Re managing a narrow underwriting profit with a 99.7 combined ratio RAA said.
Commenting on the RAA figures, New York-based investment firm Prudential Equity Group stated that surplus gains for the quarter, while positive, were modest and that lackluster performances of the "Big Four" companies should help keep the marketplace disciplined.
"Because reinsurers are rebuilding surplus destroyed due to past underwriting mistakes, we expect these companies to remain disciplined through 2004," the investment firm forecast.
Additionally, the Prudential Equity Group rated ACE Limited and XL Capital as "buy," predicting that these reinsurers should continue to "benefit from a tight casualty reinsurance market."
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