U.S. Reinsurers' Premium Fell In ?04 First Half

NU Online News Service, Oct. 26, 4:20 p.m.EDT?Thirteen major U.S. reinsurers saw first-half premiumincome drop three percent, according to figures from BenfieldGroup. [@@]

The firm reported that on a year-over-year basis premium droppedto $18.9 billion, hurt by softening rates that are increasinglycoming under pressure.

Overall, underwriting performances for U.S. reinsurers haveimproved during the 2004 first half. The reinsurers featured byBenfield returned an unweighted average combined ratio of 91.5percent for the first six months of 2004?improving from 94.7percent posted during the same period one year earlier.

The report noted that the total net income for these reinsurersimproved slightly, rising eight percent to reach $2.8 billion forthe first six months of 2004; but the study also explained thatthis increase was largely driven by National Indemnity, which sawits net income go up 73 percent to $1.2 billion, thanks to asubstantial improvement in investment income and net realizedgains.

The largest drop in net income was reported by General Re,decreasing by 53 percent to $343 million.

The report, titled "Benfield U.S. Quarterly," based its findingson 13 U.S.-based reinsurers who are members of the ReinsuranceAssociation of America: Swiss Re US, XL Re, American Re, NationalIndemnity, Transatlantic Re, ERC Group, Everest, General Re,Odyssey America Re, Berkley, Folksamerica Re, QBE Re Corp, andAmerican Agricultural.

Benfield warned in its report that reinsurers face a substantialloss from the devastating Florida hurricane season?but with lossestimates continuing to be assessed by companies; it is stilldifficult to offer a definitive picture of loss experiences.

However, some of the reinsurers with significant loss estimatesinclude Munich Re, Swiss Re, XL Capital, Everest Re and ERCGroup.

Commenting on marketplace conditions, Benfield said that at theend of the second quarter, reinsurers had announced a continuingfall in property and catastrophe pricing already seen during theJanuary 2004 renewal season.

The report also pointed to a consensus among U.S. reinsurersthat casualty pricing is coming under pressure.

Benfield also said U.S. companies still find underwriting to bedisciplined and pricing technically adequate.

On casualty pricing and conditions, the pace of improvement incasualty-line rates has slowed, although longer-tail casualty linescontinue to exhibit greater strength. The full report is availableon the Benfield Group Web site at www.benfieldgroup.com.