US reinsurers post US$3.14 billion net income for 2004

U.S. reinsurers posted net income slightly higher for 2004 at US$3.14 billion, according to results from members of the Reinsurance Association of America (RAA). The RAA’s 26 members posted net income of US$3.08 billion in 2003.
However, the slight uptick did not come from improved underwriting. Overall, the industry’s combined ratio worsened to 106.2% in 2004 from 101.2% in 2003. This produced an underwriting loss of US$1.80 billion last year, far worse than the US$560.43 million underwriting loss reported in 2003.
Gross written premiums dropped in 2004 to US$43.18 billion (2003: US$47.73 billion), while net earned premiums fell to US$28.56 billion (2003: US$29.80 billion).
Losses (losses and loss adjustment expenses) rose slightly to US$22.78 billion in 2004, with a loss ratio of 79.8%, compared to losses of US$22.04 billion and a loss ratio of 74.0% in 2003.
Commissions amounted to US$5.56 billion in 2004, down from US$6.08 billion in 2003. And the industry’s combined ratio last year was 26.4%, an improvement over the 27.2% expense ratio seen in 2003.
Investment income dropped to US$4.76 billion in 2004 (2003: US$5.62 billion), but realized capital gains shot up to US$1.80 billion last year (2003: US$873.09 billion).
At December 31, 2004, policyholders’ surplus stood at US$61.21 billion up from US$55.92 billion at the end of 2003.