June 16th, 2009

Net Income Slips for European Reinsurance Composite

Posted at 1:30 AM ET

Christopher Klein, Global Head of Business Intelligence
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Declines among a few large players resulted in a USD2.1 billion aggregate net loss for the Guy Carpenter European Reinsurance Composite for the first quarter of 2009. This represents a substantial shift from net income of USD709 million for the first quarter of 2008. Realized losses were primarily responsible for the year-over-year change.

[Chart after the jump]

gc-reinsurance-europe-comp-source

Realized losses swelled 261 percent to USD3.1 billion for the European Reinsurance Composite, as many reinsurers exited unprofitable investment positions and cemented unrealized losses from last year. Through the end of 2008, unrealized losses represented the drag on earnings, a trend which appears to have come to a close in 2009. Overall, investment income was off 18.5 percent, mostly as a result of falling yields and a smaller financial base. Two of the seven companies in the European Reinsurance Composite reported net losses after realized and unrealized investment gains and losses.

Non-life underwriting gains partially offset realized investment losses in the first quarter of 2009. In aggregate, non-life underwriting income was up 15 percent year-over-year to USD1.8 billion and was helped along by the release of prior years’ loss reserves.

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