Global reinsurers report improved results in 2013 after ‘manageable’ cat losses: Fitch

Global reinsurers reported solid underwriting gains last year, as “catastrophe-related losses were manageable and loss reserve development remained favourable,” Fitch Ratings said Tuesday.

Among the global reinsurers that the firm tracks, the underwriting combined ratio improved to 85.5% in 2013, from 89.3% in 2012, Fitch said in a report released Tuesday.

The improvement is due in part of lower than average catastrophe losses last year – $31 billion, compared with the 10-year average of $56 billion, and a decrease from $65 billion in 2012.

The Atlantic hurricane season was relatively quiet and most catastrophe losses last year came from flooding events in central Europe and Canada, as well as severe thunderstorms in the United States, Fitch reported.

“Solid underwriting profitability was, however, offset by an adverse change in unrealised investment gain/loss position on fixed maturities and capital market activity, resulting in shareholders’ equity growth of only 0.6% for non-life reinsurers in 2013,” the firm also noted.

“In addition, this group experienced only marginal growth in reinsurance premiums written as underwriting opportunities were limited.”

Some individual product lines, including longer-tail casualty and liability lines, also experienced unfavourable reserve development last year, although earnings were supported by prior-year reserves.  Reserve releases were equivalent to 6.1% of earned premiums in 2013, against 6.5% at the end of 2012, Fitch said.