European reinsurers see improved 2004 profits

Despite record catastrophe losses, European reinsurers recently registered recorded improved profitability for 2004, according to the latest European Reinsurance Quarterly Report from Benfield.
Results from six major European reinsurers exhibit earning results from non-catastrophe business held up so that overall losses were moderate, according to Benfield’s Industry Analysis and Research team spokesman Lewis Phillips.
“The retention of catastrophe losses by primary insurers was the main factor behind the relatively low burden of the storm losses on reinsurers,” Phillips says. “Hannover Re, Munich Re and Swiss Re reported combined ratios of under 100%. Reserve strengthening pushed combined ratios for Converium and Alea’s reinsurance business to 118%.”
The report from Benfield, an independent reinsurance and risk intermediary, noted that aggregate gross premiums for the six reinsurers fell when profitability with disciplined, selective underwriting was focused on instead of volume. However, Alea was the exception citing a 7% rise in gross premiums due to strong underlying growth. According to the report, investment returns and pre-tax profits surged because of an increase in realized capital gains and the decreasing cost of write-downs.