U.S. Reinsurers See Combined Ratios Soar

London Editor

Figures released last week by the Reinsurance Association ofAmerica reflect the devastating effect of World Trade Center losseson U.S. reinsurers, with the industry's combined ratio throughthree quarters soaring to 139.5.

The RAA said the combined ratio reported by a group of 30 U.S.property-casualty reinsurers for this year so far compares with afigure of 112.2 reported by a similar group of reinsurers throughthe third quarter of 2000. The 2001 ratio is attributable to a109.5 loss ratio and a 30.0 expense ratio, the Washington-based RAAsaid.

Don Watson, director of insurance ratings at S&P in NewYork, said the industry's loss ratio for the third quarter wouldprove to be the worst ever reported by the industry for a singlequarter. “It will surpass the loss ratios reported for HurricaneAndrew and Hurricane Iniki in 1992,” he said.

(RAA does not release loss ratios for individual quarters afterthe first quarter. However, the loss ratio for the first half ofthis year was 85.7, demonstrating the tremendous impactthird-quarter losses had on industrywide results.)

RAA reported that policyholder surplus for the 30 companiesdropped from $23.8 billion during the nine-month period in 2000 tonearly $23.0 billion during the nine-month period in 2001.

Significantly, this is the first public evidence of a reductionin capacity in the reinsurance industry, noted Mr. Watson, whopredicted that this will lead to further rate increases. “At thispoint in time, S&P sees about a $15 billion loss for the globalreinsurance industry from the World Trade Center and a $10 billionloss for the primary industry, with the expectation that bothnumbers will continue to rise,” he said.

The RAA's group of 30 U.S. p-c reinsurers wrote $19.5 billion ofnet premiums during the first nine months of 2001, compared with$18.5 billion for the same period last year. The 5.5 percentincrease demonstrates that there was some rate improvement in 2001,Mr. Watson said.

An alphabetical selection of individual company combined ratiosduring the nine-month period include:

American Re-Insurance Company at 136.1 for the nine-month periodof 2001, compared with 114.3 last year.

Axa Corporate Solutions Reinsurance at 125.5, compared with108.5.

Berkley Insurance Company at 130.5, compared with 108.1. (Lastyear, Berkley was listed under the name Signet StarReinsurance.)

CNA Re at 293.6. Last years figure of 109.0 includes combinedU.S. and non-U.S. affiliate operations.

Everest Reinsurance at 115.6 compared with 104.6.

Folksamerica Reinsurance at 115.8, compared with 110.7.

General Re Group at 167.6, compared with 111.9.

Gerling Global Reinsurance at 124.0, compared with 113.7.

Odyssey America Re at 113.7, compared with 107.8.

Overseas Partners U.S. Re at 120.0. (No comparisons can be madewith last year, as the company started up in October 2000.)

Partner Re U.S. at 114.1, compared with 112.5.

PMA Capital Insurance at 126.5, compared with 125.8.

PXRE Reinsurance at 138.4, compared with 142.2.

QBE Reinsurance Corp. at 106.0, compared with 111.1 lastyear.

SCOR U.S. Group at 113.6, compared with 140.4.

St. Paul Re at 143.7, compared with 112.3.

*Swiss Reinsurance American Corp. at 176.3, compared with115.9.

Transatlantic Re Company/Putnam Re Company at 116.7 comparedwith 100.7.

Trenwick America Corp. at 125.7 compared with 131.5.

Zurich Reinsurance (NA) Inc. at 111.8, compared with 112.0.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, December 3, 2001.Copyright 2001 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.

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