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February 2012
Reinsurance organic revenue increased 4% due primarily to strong growth in capital market transactions and advisory business and modest growth in global facultative placements.
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The February 2012 issue of Reactions is now online. Click through to read a selection of stories from the issue.
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Feature: Woeful investment returns, cat losses and evolving regulatory pressures are causing concern for Bermuda’s insurers and reinsurers.
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In spite of substantial cat losses, the German reinsurance giant has revealed a profit for both the full year and the final quarter of last year.
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January 1 renewals were “very heterogeneous”, said Munich Re, which also noted that it had pulled away from some business lines which "no longer met profitability requirements."
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The American firm has reported a net loss of almost $60m for the final quarter of 2011, and a net loss of $99m for the full year.
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US insurer Allstate has reported net income of $724m for the fourth quarter of 2011, up from $296m in the same period in 2010.
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Bermuda’s insurers and reinsurers have weathered a torrid 2011 for catastrophes and are now looking optimistically forward to this year, with further price increases and M&A the talk of the island.
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The German reinsurer says that rates increases at January 1 do not yet indicate a hardening market, although it expects further rises throughout subsequent renewals periods.
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The US Supreme Court has refused to delay the implementation of a $104m judgement against Louisiana Citizens Property Insurance.
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January 2012
Assurant purchases $130m catastrophe reinsurance coverage through Ibis Re II cat bond.
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Ace’s fourth-quarter results include $155m of cat losses and a reserve charge for Ace’s run-off businesses including Brandywine, of $80m, of which $67m was a pre-tax addition to asbestos and environmental reserves.
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While some insurers are mulling substantial price rises, brokers are sceptical over such hikes due to the competitive nature of the marine insurance industry.
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The rating agency commends the French insurance industry for improved underwriting discipline, and suggested combined ratios could drop while prices will continue to increase.
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The Bermudian insurer has also raised estimated exposure to Tohoku earthquake by $42.2m to a net loss estimate of $117.3m.
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Comment: Insurers have issued an ultimatum to the UK Government to produce a solution to sustaining universal flood coverage, says Garry Booth, Reactions’ contributing editor.
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The reinsurance broker estimates that the market for insurance loss warranties reached trading volumes of $6bn last year, an estimated 10% to 25% increase in trading.
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Interview: Former Alterra reinsurance CEO John Berger has proclaimed his new reinsurance firm, Third Point Re, alive and well following it receiving a financial strength rating of A from AM Best in early January.
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Gross premiums written for the year was around $1.9bn, while overall combined ratio reached around 98%, Alterra’s CEO Marston Becker says.
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The loss estimates include $27.9m from recent Thai floods, and increases of $17.1bn and $11.8bn to earthquakes in Japan and New Zealand, respectively.
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Hannover Re has increased its “K Cession” capital markets proportional retrocession programme by around $20m to $350m.
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Perils releases initial insured loss estimate for windstorm Joachim, which occurred in western Europe from December 15 to 17 last year.
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Comment: Guy Carpenter’s reinsurance renewals report included a handy checklist of the big themes facing the global insurance and reinsurance market this year. it is noticeable what themes don’t make the list, says Michael Loney, managing editor of Reactions.
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Zurich Financial Services assesses impact of floods in Thailand, revises estimate of earthquakes in New Zealand, and announces reinsurance recovery.
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The insurer also expects Q4/2011 cat losses to reach $6.5m post-tax, mainly related to Thai floods.
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The revised outlook from stable to negative is a result of the company’s recent earnings volatility and increased exposure to higher-volatility assets.
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The ratings agency has placed PartnerRe’s ratings under negative review following the company’s loss estimates from the Thai floods,and Q4 results outlook.
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AM Best has kept QBE's 'A' financial strength rating, after the Australian insurer revised its guidance for post-tax profit for 2011.
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The Bermudian reinsurance firm also expects to take a hit of $31m in its weather and energy risk management operations from warm weather in the UK and US.
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Impact of RMS v11, exposure to severe losses and overall competitive pressures combined to move US P&C renewal rates up to 5%, says Towers Watson.
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Rating agency says excess capital and good risk management give global reinsurers a cushion against 2011’s high catastrophe losses.
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US commercial insurance rates are expected to climb across many lines of business in 2012, continuing a trend that began in the second half of 2011, according to a report from Marsh.
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US commercial property/casualty pricing rebounded in the fourth quarter of 2011, according to The Council of Insurance Agents & Brokers’ quarterly Commercial P/C Market Index Survey.
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Insured losses from the recent storm that hit southeast US between January 21 and January 23 are expected to be well below $100m.
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Interview: Eric Smith, CEO of Swiss Re Americas, tells Reactions his views on the January 1 2011 reinsurance renewals and what areas he sees opportunities for growth.
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The Bermuda insurance and reinsurance market remains “nimble” and resilient, according to a recent report from Fitch, but the firm warned that challenges to the domicile’s advantages remain likely.
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The total includes $15m from updated catastrophe estimates, the reinsurer said.
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INTERVIEW: Greg Case, CEO of Aon, believes that the insurance broker can help its customers manage their way through the tough global operating environment and rise to the challenge of new and complex risks by working on a more robust fact basis.
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The specialty insurer estimates its Q4 results will see $25m-$35m in pre-tax cat losses from the floods.
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The property/casualty holding company has formed On Point Risk Solutions to offer P&C services to commercial property insurance carriers, reinsurers and self insureds.
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The re/insurer’s new office will focus on the Ukrainian property and casualty insurance market .
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The insurers are eyeing the non life units to expand its services in the fast growing Asian market.
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The P&C re/insurer expects a post-tax operating loss of between $26m and $41m for the fourth quarter of 2011.
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The agency has also assigned an ICR of “bbb+” to Farmers and Mechanics Fire and Casualty, with a stable outlook.
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The ratings reflect GHS’ recent underwriting losses, which led to major fall in its surplus.
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The insurer also expects updates from previous quarters to impact fourth quarter results by $75m aggregate.
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A strong fourth-quarter for cat bonds has some predicting a “banner year" for the insurance-linked securities market in 2012. Includes full-year data for ILS issuance.
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Companies must focus on new products and strategic growth opportunities to achieve profitability amidst ongoing economic challenges, according to Deloitte’s 2012 outlook report.
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S&P rates new issuance from Embarcadero Re cat bond programme.
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There was plenty to consider at the 1/1 reinsurance renewals, such as near-record catastrophe losses and irksome risk modelling issues. Now that feedback is in from reinsurers, brokers and cedants, we try to make sense of it all.
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The reinsurer expects to report an after-tax operating loss of between $130m and $150m for fourth quarter of 2011.
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2011 natural catastrophe bond transactions - as of November 17
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A recent study by the insurer has identified economic risks, business interruption and catastrophes as top three concerns for businesses.
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Standard & Poor’s rates Ibis Re II catastrophe bond, which will provide US insurer Assurant with cover against US hurricanes.
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Earthquakes have created more than $276bn in economic losses from earthquakes over the past two years, but coverage levels remain low even in earthquake-prone regions says the reinsurance giant.
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XL, RSA, Generali, Hannover Re and P&I clubs are all reportedly facing claims after the Costa Concordia grounded in the Mediterranean on January 14.
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The Bermudian reinsurer expects between $35m and $65m in losses to its 2011 fourth quarter results from the flooding.
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Increased impacts to insurers’ investment income due to low interest rates cited as major cause of rate increases.
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The Bermudian reinsurer believes the floods will result in loss expenses of $55.5m in its fourth quarter 2011 performance.
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The World Economic Forum has reported the economic and social turmoil have become major risks at the start of 2012, with technology and regulation also proving concerns.
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The Ireland-domiciled insurer and reinsurer has also announced additional losses of $35m from catastrophes in the first three quarters of 2011.
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Catastrophes resulted in about $107bn in insured losses during 2011, second only to $120bn in 2005, says Aon Benfield’s annual catastrophe report.
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Data: AM Best data reveals world's largest insurance companies by assets and net premiums.
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ANALYSIS: A report on January renewals from reinsurance broker Guy Carpenter says after a costly year of Asian catastrophes in supposed “cold spots”, capital levels have recovered but cat rates are sharply up at renewal.
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The renewals were orderly but deals took longer than usual, says Swiss Re America’s CEO at a conference, while FM Global’s CEO says property will start to look more like casualty because supply chain issues are making the tail longer.
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Can complex accumulation risks be controlled? Probably not completely, says Munich Re CRO Joachim Oechslin, but progress is being made
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The insurer will offer package, umbrella and auto policies to US agribusiness operations through MiniCo Insurance.
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The premium volume of the Latin American insurance market grew 19.2% in 2010 when expressed in euros to Eu90,316m, according to figures released by Spanish insurer Mapfre.
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AM Best assigns ratings to Bermudian start-up reinsurer Third Point Reinsurance Ltd.
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Total costs from natural hazards for the last six months of 2011 could reach $433m, the insurer has warned.
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COMMENT: Policymaker and big businesses still have a lot to learn about resilience, judging from the findings of a new report from Chatham House, says Reactions contributing editor Garry Booth.
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ANALYSIS: An Aon Benfield report suggests that overhaul of cat models in 2011 “missed” the mark, Florida will seek added reinsurance, and reinsurers remain well capitalised – managing an aggregate profit for 2011.
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The Australian insurer said it expects reinsurance expenses of $722m-$743m for the financial year ended 30 June 2012.
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One percent increase in composite US property/casualty rates “further supports our findings that the soft market cycle has ended”, says MarketScout.
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The world’s biggest reinsurer estimated global insured losses at $105bn, above the $101bn level of cat claims in 2005, the next most damaging year.
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Fresh Start offers insurance to people who face problems in getting insurance as a result of criminal conviction
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Industry leaders must learn lessons from the 2011 disasters and overcome their “sanguine” attitude towards large risks, says Lloyd's CEO Richard Ward.
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The UK insurer has transferred US hurricanes and earthquakes, and European windstorm risks to the capital markets.
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The December 2011/January 2012 issue of Reactions is now online. Click through to read a selection of stories from the issue.
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Reinsurance market rates have “increased by meaningful amounts” over the past six months, says a report from US reinsurance broker Holborn.
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Insurers and the government must reach a new agreement on high risk properties says the ABI, with the current deal due to expire in 2013.
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Brian Boornazian, chief executive of Bermudian reinsurer Aspen Re, says the market turn is neither “classic”, nor “dramatic”, and that rates at renewal are still no higher than 1999 prices.
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P&C insurers’ nine-month combined ratio deteriorated to 109.9%, while net underwriting losses grew to $34.9bn, says PCI.
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Source: Goldman Sachs