Archive for July, 2008



July 31st, 2008

Bag Profits Early: Investment Gains Under Pressure

Posted at 2:06 PM ET

Christopher Klein, Global Head of Business Intelligence
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Asset-driven losses have put pressure on earnings. Investment gains comprise an important part of carriers’ long-term profits, and financial markets have shown just how volatile this source can be. With net income off 60 percent from the first half of 2007 to the first half of 2008, carrier profitability will become increasingly reliant on technical earnings.

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July 31st, 2008

Chart: Equity Value Trends, How Insurers Fare

Posted at 4:46 AM ET

Capital markets are still trying to find solid ground. Equity values are depressed both generally and for the (re)insurance industry specifically. The FTSE 100 and S&P 500 indices are down approximately 15 percent year-over-year (measured from 2007H1 to 2008H1). The Dow Jones Euro STOXX 50’s decline of 25 percent is more precipitous, but it is not as severe as the 34 percent plunge of the Dow Jones Insurance STOXX 600.

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From Bag Profits Early: Investment Gains Under Pressure >>

July 31st, 2008

Chart: Global Carrier Earnings, 1H07 to 1H08

Posted at 4:38 AM ET

A study of several prominent risk-bearers suggests that investment gains are down profoundly across the (re)insurance industry significant. Investment gains for this group reached an aggregate USD98 million for the first half of 2007. For the same period in 2008, though, the group showed an aggregate investment loss of USD566.2 million, and the majority has been realized. Net income is down 60 percent year-over-year.

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From Bag Profits Early: Investment Gains Under Pressure >>

July 15th, 2008

Chart: Quoting Behavior at July 1, 2008 Renewals

Posted at 4:30 PM ET

In successive renewal anniversaries, catastrophe quote spreads have tightened as reinsurers have become more realistic about their abilities to maintain expiring prices. But, there was little change in overall terms and conditions. Retentions and limits are generally stable. In the United States, the memory of terror risk seems to be fading. Rates for this peril continue to decline, particularly for covering retentions under the TRIA program (and its USD100 million event trigger).

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July 15th, 2008

Chart: Property & Casualty Renewals at July 1, 2008

Posted at 4:17 PM ET

Quotes and firm order terms (FOTs) were down relative to July 1, 2007 renewals. Both lower and higher layers sustained double-digit declines. FOTs for the former were down 15 percent to 20 percent year-over-year, while lower layers were off 10 percent to 15 percent.

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July 15th, 2008

No Surprises, Rates Continue to Fall: P&C Reinsurance Renewals, July 1, 2008

Posted at 4:09 PM ET

Christopher Klein, Global Head of Business Intelligence
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Excess capital caused soft market conditions persisted at July property and casualty renewals. For property-catastrophe covers, risk-adjusted pricing dropped 10 percent to 20 percent relative to July 1, 2007. Quote ranges narrowed, though, as reinsurers responded to the realities of the market. The weakening global economy has squeezed insurance and reinsurance markets, as well as corporate profitability worldwide. This has led to considerable expense pressure, including the cost of insurance and reinsurance premiums.

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