March 30th, 2009

Bermuda Reinsurance Composite Net Loss of USD6.6bn

Posted at 1:00 AM ET

klein_chris_bio Christopher Klein, Managing Director and Head of Global Business Intelligence
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The Guy Carpenter Bermuda Reinsurance Composite posted an aggregate net loss of USD6.6 billion for full-year 2008. This represents a precipitous drop from 2007’s net gain of USD8.6 billion. Again, unrealized losses were the primary source of the problem. Eight of the 18 companies in the composite would have reported net profits if not for them. The composite’s aggregate return on equity (ROE) fell to -7.9 percent.

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Again, underwriting was not the problem last year. Fifteen of the 18 companies in the Bermuda Reinsurance Composite posted underwriting gains. Nonetheless, insured losses from Hurricanes Gustav and Ike — particularly because of Bermuda’s relatively high property-catastrophe exposure — caused the composite’s earnings as a whole to fall 70 percent.

Both realized and unrealized investment losses impaired the Bermuda Reinsurance Composite’s 2008 earnings. A small realized investment loss of USD200 million swelled to USD4 billion in 2008. Unrealized losses grew from USD100 million in 2007 to USD5.9 billion last year.

Read Shareholders’ Funds Down 15% for Bermuda Reinsurance Composite >>

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