European reinsurers in the first quarter reported underwriting profits for the first time since 2004, making a profitable start to the year, according to London-based insurance broker Benfield.
The firm's 22-page report said that while the companies Benfield studied are hoping for a vintage year, the brokerage views this as uncertain given above-average hurricane activity predicted for the Atlantic and other catastrophic exposures by the group.
Benfield looked at Converium AG, Hannover Re, Munich Re, SCOR and Swiss Re.
Examining profit measures, Benfield noted Munich Re had the lowest combined ratio at 91.9, and that Converium saw its ratio fall nine points to 96.6 compared with first quarter 2005.
The report found it significant that none of the companies reported adverse development on 2005 hurricanes. There were man-made losses cited, such as the Hyundai Fortune container ship fire and a major satellite loss.
Benfield noted a modest decline in reinsurer investment income, with profits still rising strongly, most markedly at Converium, rising to $44 million (up 208 percent) for the period, and SCOR, with profits nearly doubling at $111 million.
The report said in terms of premiums, there were contrasting top-line trends, with Hannover Re and SCOR reporting growth in total growth premiums of 9 percent and 18 percent, respectively, while Converium premiums contracted by 14 percent and Munich Re's by 1 percent.
Pricing in the April 1 renewals in Japan, Korea and the United States was reported to be generally stable, with reinsurers securing risk-adequate prices, Benfield found.
The brokerage noted prices for peak-zone earthquake coverage rose 5 percent, while property rates written through Lloyd's went up as much as 100 percent in peak windstorm zones in the United States.
Benfield said it heard from Hannover Re that windstorm prices moved higher in Japan, assisted by a recalibration of pricing models. Benfield also reported that Hannover is anticipating improvements in market conditions for upcoming July renewals, but that the reinsurer has scaled back exposures–particularly in the United States.
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