Net income dropped USD22.4 billion year-over-year to a loss of USD7.5 billion for the Guy Carpenter European Reinsurance Composite for full-year 2008. In 2007, the composite posted aggregate net income of USD14.9 billion. Total return on equity (ROE) fell to -9 percent.
Consistent with trends evident in other parts of the world, unrealized investment losses were the major culprit, at an aggregate loss of USD14.7 billion last year (from a loss of USD600 million the year before). Realized investment losses mounted as well. The carnage in financial markets around the world eradicated 2007’s realized investment gain of USD3.7 billion and returned a USD8.6 billion loss for 2008.
Underwriting profits fared much better. The 59 percent drop year-over-year indicates that some profit, overall, remained last year. In fact, only one company in the European Reinsurance Composite posted an underwriting loss. The decline in underwriting profits resulted largely from Hurricanes Gustav and Ike, as well as large individual losses early in the year.
Paris Re has reported its full-year 2008 financial results, but this does not result in a directional change to the data above.
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