U.S. Reinsurers' Premium Fell In ?04 First Half

U.S. Reinsurers' Premium Fell In ?04 First Half

NU Online News Service, Oct. 26, 4:20 p.m. EDT?Thirteen major U.S. reinsurers saw first-half premium income drop three percent, according to figures from Benfield Group. [@@]

The firm reported that on a year-over-year basis premium dropped to $18.9 billion, hurt by softening rates that are increasingly coming under pressure.

Overall, underwriting performances for U.S. reinsurers have improved during the 2004 first half. The reinsurers featured by Benfield returned an unweighted average combined ratio of 91.5 percent for the first six months of 2004?improving from 94.7 percent posted during the same period one year earlier.

The report noted that the total net income for these reinsurers improved slightly, rising eight percent to reach $2.8 billion for the first six months of 2004; but the study also explained that this increase was largely driven by National Indemnity, which saw its net income go up 73 percent to $1.2 billion, thanks to a substantial improvement in investment income and net realized gains.

The largest drop in net income was reported by General Re, decreasing by 53 percent to $343 million.

The report, titled "Benfield U.S. Quarterly," based its findings on 13 U.S.-based reinsurers who are members of the Reinsurance Association of America: Swiss Re US, XL Re, American Re, National Indemnity, Transatlantic Re, ERC Group, Everest, General Re, Odyssey America Re, Berkley, Folksamerica Re, QBE Re Corp, and American Agricultural.

Benfield warned in its report that reinsurers face a substantial loss from the devastating Florida hurricane season?but with loss estimates continuing to be assessed by companies; it is still difficult to offer a definitive picture of loss experiences.

However, some of the reinsurers with significant loss estimates include Munich Re, Swiss Re, XL Capital, Everest Re and ERC Group.

Commenting on marketplace conditions, Benfield said that at the end of the second quarter, reinsurers had announced a continuing fall in property and catastrophe pricing already seen during the January 2004 renewal season.

The report also pointed to a consensus among U.S. reinsurers that casualty pricing is coming under pressure.

Benfield also said U.S. companies still find underwriting to be disciplined and pricing technically adequate.

On casualty pricing and conditions, the pace of improvement in casualty-line rates has slowed, although longer-tail casualty lines continue to exhibit greater strength. The full report is available on the Benfield Group Web site at www.benfieldgroup.com.