Chris Klein, Global Head of Business Intelligence

European reinsurers saw their balance sheets impaired in 2008 by the ‘perfect storm’ of high investment losses, significant claims losses from US Hurricanes Ike and Gustav and softening rates. However, the European cohort did prove its resilience owing to a strong capital position before the financial storm. In 2009, the main focus for the European reinsurance community was to replenish balance sheets and boost capitalisation. Modest catastrophe activity, hardening rates in some lines of business and improved capital market conditions helped them to achieve this ambitious target.

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With 2009 coming to a close, this week we’re taking a look at the most popular stories of the year.

Reinsurer Financial and Cat Losses High, Bermuda Hit Most: A tough year for reinsurers is coming to a close. The worldwide financial catastrophe has impaired investment assets and put downward pressure on profits. At the same time, combined ratios were sent higher by an above-average year for catastrophe losses, especially as a result of Hurricane Ike. So, we enter 2009 with capital constrained, shareholders’ funds diminished, and a combined ratio for the Guy Carpenter Global Composite at its second-highest level in five years.

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Lloyd’s 2008 Results — Resilience in a Tough Market: Lloyd’s of London (”Lloyd’s”) competitive position strengthened in 2008, largely because of effective risk management oversight and relatively conservative investment allocation. The capital structure has proved resilient in the face of the worldwide financial catastrophe and financial strength ratings remain strong and stable. As a result, Lloyd’s is well-positioned to benefit from current market dislocation.

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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]

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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.

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Global Reinsurers Shareholders’ Funds up 4.9% (Interim) >>
(Tuesday, May 12, 2009)

Chart: Bermuda Reinsurers Shareholders’ Funds up 4.9% (Interim) >>
(Thursday, May 14, 2009)

Chart: European Reinsurers See Shareholders’ Funds Increase by 5.6% (Interim) >>
(Friday, May 15, 2009)

We will be publishing updates throughout the 1Q2009 reporting season. To receive updates in your inbox, register for e-mail updates.

The Guy Carpenter European Reinsurance Composite shows a 5.6 percent increase in shareholders’ funds, with six of seven companies reporting. Aggregate shareholders funds have grown from USD71.9 billion for the first quarter of 2008 to USD76 billion for the first quarter of 2009 from year-end 2008. The median increase for the companies of the European Reinsurance Composite is 3.8 percent; weighted average results are skewed by Swiss Re’s capital increase.

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Bermuda Reinsurance Composite Net Loss of USD6.6bn >>
(Monday, March 30, 2009)

European Reinsurance Composite Posts USD7.5bn Loss >>
(Tuesday, March 31, 2009)

Lloyd’s Listed ILVs’ Earnings Stay Positive >>
(Wednesday, April 1, 2009)

USD6.1bn Loss for Global Reinsurance Composite >>
(Thursday, April 2, 2009)

Christopher Klein, Managing Director and Head of Global Business Intelligence
Contact

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.

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Shareholders’ Funds Down 15% for Bermuda Reinsurance Composite >>
(Monday, March 23, 2009)

Shareholders’ Funds Down 21% for European Reinsurance Composite >>
(Tuesday, March 24, 2009)

Lloyd’s Shareholders’ Funds Relatively Stable >>
(Wedensday, March 25, 2009)

Shareholders’ Funds Down 18% for Global Reinsurance Composite >>
(Thursday, March 26, 2009)

Christopher Klein, Managing Director and Head of Global Business Intelligence
Contact

The Guy Carpenter European Reinsurance Composite’s aggregate shareholders’ funds fell 21 percent year-over-year. Excluding Swiss Re’s capital increase, it would have been down 23 percent. Several drivers led to the USD20 billion drop in total shareholders’ funds (USD93 billion to USD73 billion). Unrealized losses accounted for 60 percent of the decrease.

(Chart after the jump)

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