9 July 2013 News

US reinsurers’ premiums hit 10-year high

Reinsurers in the US wrote record levels of net premiums in 2012 hitting levels not seen in a decade, according to the Reinsurance Association of America (RAA).

The RAA tracks the results and performance of a group of 27 of the biggest reinsurers in the US. The results could come as a surprise given concerns in the industry over the growing market share being absorbed by vehicles using alternative capacity.

The RAA’s recent report called ‘Reinsurance Underwriting Review: 2012 Industry Results’ reports that these 27 companies posted net premiums written of $31.6 billion—the highest figure since the group posted about $33 billion in net premiums in 2003.

This compares with net premiums written of around $28 billion in 2011.

The report also revealed that 2012 was a profitable year for the sector. The group of companies put a year of heavy catastrophe losses in 2011 behind them to record a 2012 underwriting profit of $973.9 million compared to a loss of $2.2 billion in 2011. Net income for the 27 companies was $8.3 billion compared to about $7.3 billion in 2011.

The 2012 figures break down as follows: the group reported net premiums  written  of  $31.6 billion,  premiums  earned  of  $31.0 billion, loss and loss adjustment expenses of $20.4 billion, commission and broker expenses of $6.5 billion, and other underwriting expenses of $3.1 billion.

The  figures  show  a  weighted  loss  ratio  of 65.9%,  commission  and  broker  ratio  of 20.6%,  other underwriting  expense  ratio  of  9.6%, and  a combined ratio  of 96.2%. As a group, the reinsurance companies reported policyholders’ surplus of $128.0 billion.

This same group  of  reinsurers  reported  a return  on  equity  of 6.9%,  an  investment  yield  of 2.3%,  net-net  reinsurance  exposure  that  was 6.2%  of surplus and net leverage of 123.6%.

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