WASHINGTON–The reinsurance industry's vital signs are showing vast improvement over 2005′s disastrous, catastrophe-marred results, according to statistics released today by the Reinsurance Association of America
The group noted a combined ratio of 95.4 for the first nine months of 2006, compared to 124.1 for the same period a year earlier.
The RAA said the data reflects the result of 23 reinsurers that are members of the RAA, representing nearly two thirds of the gross reinsurance coverage provided by U.S. reinsurance companies and affiliates written by the U.S. industry.
The data also reflects the volatility of the business, as 2006 has been relatively catastrophe-free, despite predictions of a terrible year, while Wilma, Katrina, et al, "definitely impacted 2005 results," said W. Scott Williamson, assistant vice president of financial analysis at RAA.
In 2004, he noted, four hurricanes ripped across through Florida.
RAA said the net loss for the 23 reporting companies in the first nine months of 2005 was $133.6 million. For the first nine months of 2006, by contrast, net income rose to $6.3 billion.
The data indicates that gross written premiums for the first nine months of 2006 rose 3.8 percent over the same period of time in 2005, with net premiums written by RAA members rising 4.2 percent and policyholder surplus of RAA members reporting an increase of 9.2 percent for the period, from $63.6 billion to $69.4 billion.
Other healthy signs included a decline in loss ratios from 97.1 percent for the first nine months of 2005 to 67.8 percent in the first nine months of 2006.
And the underwriting gain or loss changed from a minus $4.5 billion in the first nine months of 2005 to a profit of $770.6 million in the first nine months of 2006.
"As a result, 2006 appears to be a good year for the reinsurance industry," Mr. Williamson noted. The combined ratio of 95.4 compared to 124.1 for the same period in 2006 constitutes "a significant improvement," he said.
For some individual companies, the results were extremely strong. For example, National Indemnity Company, owned by Warren Buffet's Berkshire Hathaway Company, had a net profit of $4.5 billion for the first six months of 2006, raising its policyholder surplus to a group-leading $31.3 billion.
By contrast, Gen Re Group, another Berkshire Hathaway unit, showed a profit of $557.9 million for the first nine months of 2006, raising its policyholder surplus to $8.9 billion.
Swiss Re, which acquired the GE Insurance Solutions Business of General Electric in June, showed a pretax loss of more than $1 billion and a net loss of $911.7 million, dropping its surplus to $7.4 billion, the data indicates.
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