The weighted average of the combined ratio of the Guy Carpenter Global Reinsurance Composite increased from 92.1 percent at end of year 2009 to 102.5 percent at first half 2010, the highest combined ratio since 2005, the year of the Katrina/Rita/Wilma Hurricanes.

Source: Guy Carpenter & Company, LLC

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Shareholders’ funds for the companies in the Guy Carpenter Global Reinsurance Composite decreased by 0.8 percent to USD109 billion between December 31, 2009 and June 30, 2010. The increase in shareholders’ funds from retained earnings and the unrealized increase in asset values were offset by share buy-backs, dividends and currency effects.

Source: Guy Carpenter & Company, LLC

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Total earnings for the Guy Carpenter Global Reinsurance Composite in the first half of 2010 decreased by 6.4 percent to USD4.8 billion compared with the same period in 2009. The principal driver was an underwriting loss of USD901 million compared with profit of USD2.4 billion in the prior year.

Source:  Guy Carpenter & Company, LLC

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Chris Klein, Global Head of Business Intelligence
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The Guy Carpenter Global Reinsurance Composite’s net income declined in the first quarter of 2010 compared with the same quarter in 2009. The companies comprising the group showed an aggregate net gain of USD1.4 billion, a decline of 31 percent from the first quarter of 2009. The primary driver was an increase in non-life underwriting losses.

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The Guy Carpenter Global Reinsurance Composite’s non-life underwriting result suffered a loss of USD1.5 billion. This loss contrasts with the corresponding quarter in 2009, which showed a non-life underwriting gain of USD1.1 billion. The first quarter of 2010 was dominated by natural catastrophe events including the Chile earthquake, U.S. winter storms, Windstorm Xynthia in Europe and hail in and around Melbourne, Australia. Catastrophe losses from events in excess of USD250 million totaled approximately USD17 billion in the first quarter of 2010 compared with USD7 billion in the first quarter of 2009.

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The large number of major losses that occurred in the first quarter impacted the Guy Carpenter Global Reinsurance Composite’s loss ratio, increasing it to 79.9 percent from 65.3 percent in the first quarter of 2009 and 62.7 percent for the full year 2009.

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Aggregate shareholders’ funds for the composite declined in the first quarter of 2010 by 0.4 percent to USD109.5 billion from a 2010 year-end figure of USD110 billion. The slight decline occurred as reduced net income accompanied the members’ dividend payments and share buybacks. The latter were instigated in response to the newly replenished balance sheets, as the investment environment improved.

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Chris Klein, Guy Carpenter’s Head of Business Intelligence, reviews the dramatic change and improvement in reinsurers’ fortunes following the global financial crisis. He reviews the year- end 2009 earnings results of the Guy Carpenter Bermuda Reinsurance Composite. He also reviews the primary drivers for capital decline and then growth among those reinsurers in 2008 and 2009, respectively. The impact of capital growth on capacity is also discussed.

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Source: Company Reports & Accounts, Guy Carpenter

Fortunes for this cohort of companies improved dramatically and unexpectedly in 2009 following the poor performance during 2008’s global financial crisis.   Aggregate net income stood at USD9.5 billion in 2009 versus a loss of USD1.9 billion in 2008.  One  principle driver in 2009 was a 71 percent increase in underwriting earnings.

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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