A representative group of reinsurers posted a combined ratio of 94.9 for 2006, a 34.5-point improvement over the 129.4 registered in catastrophe-scarred 2005.
According to the annual sampling of 23 reinsurers conducted by the Reinsurance Association of America, the carriers wrote $25.8 billion of net premium for 2006, compared with $25.3 billion for the previous year.
The reinsurers wrote $40.9 billion in gross premiums in 2006, compared with $40.2 billion in the previous year.
Last year, the sample companies posted a combined underwriting gain of $1.3 billion dollars, compared with a loss of $7.4 billion the previous year.
Investment income for 2006 came in at $10.5 billion compared with $5.2 billion for 2005.
Last year's dramatic decline in the combined ratio from the year of Hurricanes Katrina, Rita and Wilma was prompted by a sharp spike in pricing for the renewal season, particularly for catastrophe risk, and no major hurricanes last year.
But reinsurance carriers are facing new challenges this year from a number of fronts, according to William Wilt, property-casualty analyst for Morgan Stanley.
"Looking ahead, managerial skills will become as important as underwriting skills in a global marketplace with shrinking profitable opportunities," he wrote.
In terms of pricing, Mr. Wilt wrote this is now prime "jawboning" season between brokers and reinsurers.
"Our money is on the brokers arguing for rate decreases at spring and midyear renewals," he wrote.
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