Guy Carpenter Global Reinsurance Composite aggregate shareholders’ funds are up 4.9 percent for the first quarter of 2009 — relative to the full-year results for 2008, with nearly two-thirds of the companies in the composite reporting. All companies but one saw increases this quarter, with a median gain of 2.1 percent.
Earnings made a positive contribution to the increase in shareholders’ funds, despite dropping 36 percent to USD2.1 billion (for the 14 companies reporting so far). The total underwriting result was up 122 percent — thanks to low catastrophe activity and continued releases from prior years’ loss reserves. Nonetheless, underwriting profit was offset by a 178 percent increase in realized investment losses and a quadrupling of interest expense (mostly from one company). Unrealized investment losses were again significant, largely as a result of market volatility and uncertainty in February and March 2009.
Recent bull stock markets, if sustained, may help to reverse some of the unrealized losses and further restore balance sheets, but exposure to equities was cut in the latter half of 2008, which will mute the upside.
This analysis includes 14 of the 20 companies in the Global Reinsurance Composite. We will update this chart as the remaining company reports are released. These interim shareholder results are skewed by a capital increase at Swiss Re, totaling approximately USD2.6 billion.