U.S. reinsurers see net income drop on premium declines

U.S. reinsurers watch their net income fall in the first nine months of 2004 on the back of higher losses and decline in premiums, according to data released by the Reinsurance Association of America (RAA).
For the first nine months of 2004, reporting reinsurers saw their net income drop to US$2.4 billion from US$3.3 billion for the same period a year earlier.
The decline came on the back of a drop in gross written premiums, which fell to US$33.3 billion for the nine months, from US$36.1 billion. Net earned premiums also fell over the same comparative period to US$21.4 billion from US$22.2 billion.
This decline may also be related, however, to the withdrawal of reinsurers from the U.S. market evidenced by the number of reporting companies, which dropped to 27 from 29 between third quarter 2003 and this year.
On the back of intense catastrophe losses related to the Atlantic hurricane season in the U.S., the group saw its loss ratio shoot up to 78.6% from 73.5% a year earlier. At the same time, the expense ratio dipped slightly to 25.2% from 26.3%. This produced an overall combined ratio for the group of 103.9%, up more than four points over the 99.8% reported a year ago. And the group’s underwriting loss also increased steeply to US$1.04 billion for the first nine months of 2004 from US$301.1 million a year previous.
Investment income also dropped off slightly, coming in at US$3.5 billion this year, versus US$3.7 billion a year ago.
Nonetheless, at the end of September, 2004, policyholder surplus stood at US$55.7 billion compared to US$45.9 billion at the end of September, 2003.