NU Online News Service, June 16, 12:43 p.m. EDT
Global reinsurance capital declined by more than 6 percent in the first quarter of this year, as insurers faced a host of issues including insured catastrophe losses, says Aon Benfield.
In its report, "The Aon Benfield Aggregate—Three Months Ended March 31, 2011," the reinsurance broker says global reinsurance capital fell by 6.4 percent, or $30 billion, to $440 billion from the end of 2010.
The report examines the results of 28 major reinsurers including ACE, White Mountains, Swiss Re, Hannover, Munich Re, SCOR, and Arch.
Net catastrophe losses for the group stood at $15.1 billion for the first quarter, ultimately translating into a first quarter net loss for the group of $4.3 billion compared to net income of $5.44 billion for the first quarter of 2010.
Swiss Re, Munich Re and Partner Re fared the worst with first quarter net losses of $665 million, $947 million and $816 million, the report says.
On the other hand ACE, General Reinsurance, and National Indemnity Co. (NICO) reported net income of $259 million, $643 million and $223 million, respectively. The profits at Gen Re and NICO were driven by dividend payments from subsidiaries, while ACE had a low level of catastrophe exposure, the report says.
"Strong capital positions have enabled the vast majority of [Aon Benfield Aggregate] companies to absorb substantial catastrophe losses over the last 18 months without consequent rating action," the report says. "However, the underlying operating environment remains challenging."
In a statement, Mike Van Slooten, head of Aon Benfield's international market analysis team, says the companies in the report entered the year with "peak levels of capital" and resulted in only a modest first quarter decline for shareholders "despite significant incurred catastrophe losses."
He says the shareholder losses are expected to recover in the second quarter.
Aon Benfield, a division of Chicago-based insurance broker Aon Corp., says its figures based on company reports and its own analytics.
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