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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