Reinsurers’ underwriting results in first half of 2009 were better than expected: Aon Benfield

Reinsurer underwriting results were better than expected due to the unusually low level of natural catastrophes in the third quarter, according to the Aon Benfield Aggregate (ABA) quarterly report.
Net income for the 23 global reinsurers analyzed in the report amounted to US$12.7 billion as of Sept. 30, 2009, compared to US$4.3 billion for the first nine months of 2008.
The ABA combined ratio for the first nine months of 2009 was 91.2%.
Reserve releases from prior accident years aided results, the report says.
The absence of large catastrophe losses and lower attritional losses drove a 5.7% improvement in the loss ratio, which dropped to 62.2% in the first half of 2009, Aon Benfield reported.
The expense ratio remained broadly stable at 29.0%. All but one company in the survey group reported a combined ratio of less than 100%.
“Investment income suffered due to lower interest rates and lower yields on comparatively more conservative and shorter-term investment portfolios of reinsurers in the wake of a very uncertain investment valuation environment,” Aon Benfield said in a release. “Capital benefited greatly from the material advances in fixed income securities valuations, fuelled by renewed confidence in credit quality and improving economic outlooks.  Equity market recoveries also contributed to the recovery of reinsurer capital.”