October 28th, 2008

Book Value Update: (Re)insurer Balance Sheets Remain Strong

Posted at 6:00 AM ET

The unfolding financial catastrophe continues to affect banks to a much greater extent than reinsurers. According to Bloomberg data, the weighted average book value of the S&P 500 Banks Index has dropped 34 percent year-over-year, reflecting the impairment of investment assets, particularly in September. The weighted book value of the S&P 500 Insurance Index, on the other hand, is off only 9 percent from a year ago. Though the effects of the financial catastrophe have been felt, (re)insurers have been able to withstand them.

Refined risk management strategies, copious amounts of capital, and conservative investment strategies have protected carrier balance sheets.

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