U.S. reinsurers took a beating in the past year, evidenced by a $6.9 billion drop in their overall level of surplus–down 9.5 percent to $66.0 billion in 2009 as of June 30, 2009, compared to $72.8 billion as of June 30, 2008.
During the same time period, however, underwriting results improved with the overall combined ratio coming in 3.7 points lower, according to the Reinsurance Association of America, which surveyed 19 U.S. property and casualty reinsurers to produce the figures distributed in a report last week.
Separately last week, Fitch Ratings in Chicago provided its outlook for the global reinsurance industry, reporting that while reinsurers had recovered roughly $20 billion, or 35 percent of the shareholders equity they lost in 2008 as of June 30, the rating agency is maintaining a negative outlook on the sector.
Global reinsurers with $264.3 billion in shareholders equity make up the Fitch ratings universe, which includes reinsurers with life and non-life operations, and these reinsurers saw capital recoveries from investment improvements and solid non-life underwriting results, Fitch said.
Fitch analysts warned, however, that reinsurers would struggle to replenish capital in the current financial environment should capital positions take a hit from large catastrophe losses–potentially forcing them to operate with weakened capital bases for a prolonged period of time.
While the Fitch report shows an improvement in the capital position of global reinsurers based on GAAP shareholders equity (using generally accepted accounting principles), the RAA report focuses on statutory results of a group of U.S. p&c reinsurers. Like Fitch, the RAA figures reveal increased financial strength since year-end 2008.
Comparing the $66.0 billion June 30 surplus level with a $64.5 billion level for Dec. 31, 2008 reported by RAA in an April report, the increase is roughly 2.5 percent.
The group of 19 U.S. reinsurers surveyed by the Washington-based RAA wrote $12.8 billion of net premiums during the six months ended June 30, 2009, up slightly compared to $12.7 billion for the same period in 2008, the study found.
The combined ratio for the group was 93.8, improving from the 97.5 consolidated figure reported by a similar group of reinsurers for the six months ended June 30, 2008, RAA said. Components of the 2009 combined ratio were a 65.4 loss ratio and a 28.4 expense ratio.
Among some of the net written premiums for carriers cited in the report:
o National Indemnity Company wrote $2.59 billion for the first half, down from $2.7 billion in 2008.
o Transatlantic/Putnam Reinsurance Company wrote $1.88 billion this year, compared with $1.85 billion in 2008.
o Munich Re America wrote $1.2 billion in 2009, up from $1.08 billion in 2008.
o SCOR U.S. Group/SCOR Re reported net written premiums for 2009 of $285 million, up from $185 million in 2008.
o White Mountains Reinsurance Company of America reported net premiums written in 2009 were $243 million, down from $296 million in 2008.
The survey is available at http://www.reinsurance.org.
RAA membership is diverse, including reinsurance underwriters and intermediaries licensed in the United States and those that conduct business on a cross-border basis. The RAA represents its members before state, federal and international bodies.
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