As ebbing rates and recent catastrophe losses impact European reinsurers, some of the better-positioned players, such as Munich Re and Hannover Re, are outpacing their peers, a Benfield Group study has found.
According to the reinsurance broker's latest European Reinsurance Quarterly report, among Europe's major players Munich Re and Hannover Re both reported healthy profit jumps during the 2005 first quarter.
Pre-tax profit rose 29 percent for Munich Re, 19 percent for Hannover Re. Munich Re's combined ratio was 95.5, while Hannover Re's was 97.1. Benfield said the two reinsurers were helped by growth in property-casualty as well as life-health reinsurance segments.
"As reinsurance rates begin to ebb, signs of a separation are emerging as those stronger companies unencumbered by recent problems begin to outpace their peers," Benfield noted.
For major European reinsurers, restructuring and external factors–as well as disciplined underwriting–contributed to declining premium income. However, Hannover Re bucked the trend, benefiting from its higher credit ratings and pursuit of growth in profitable market segments. Hannover Re's premium income grew 12 percent during the first quarter.
But, Benfield said restructuring was still a drag for SCOR, which saw a 22 percent slide in quarterly earnings, while underwriting losses pushed Converium into a quarterly loss of $66 million pre-tax.
European reinsurers also suffered significant catastrophe losses in the first quarter. Benfield noted that European windstorm Erwin heralded another quarter of above-average catastrophe losses for major European reinsurers.
Benfield's full report can be found at www.benfieldgroup.com/research/industry_analysis.
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