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.

By David Priebe, Chairman of Global Client Development
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The climate change debate is likely to continue unabated well into the future. Even if it is not settled anytime soon, the debate itself has already begun to affect the (re)insurance industry. Risk-bearers deal in probability routinely, making climate change another likelihood to consider. In this manner, it has entered natural peril models, risk management assumptions, and risk transfer strategies. Consequently, climate change has become part of the (re)insurance lexicon, despite the fact that scientific, sociological, economic, and political authorities have not reached a universally accepted conclusion. The absence of a definitive answer does not preclude the use of climate change-related information in risk portfolio management.

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               For companies that have reported as of November 7, 2008, shareholders’ funds fell 16 percent year-to-date. The most drastic decrease occurred in the third quarter, which saw a 10 percent drop.

This chart will be updated as additional reinsurers report third quarter results.

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Nick Frankland, CEO of European Operations
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The (re)insurance market is fraught with uncertainty. As the next renewal looms large, buyers and sellers are attempting to find common ground for risk-transfer pricing, particularly in the wake of a high-frequency hurricane season and a severe financial catastrophe with implications for both sides of carrier balance sheets. While it is too early to tell if reinsurance rates are turning, it is clear that continued substantial declines are unlikely.

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Christopher Klein, Global Head of Business Intelligence
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The popularity of sidecars seems to have ended. The availability of traditional capital and access to insurance-linked securities (ILS) and other alternatives simply has made sidecars less attractive. But, reinsurers know that the market can harden at any time, with one mega-catastrophe creating near-immediate demand for fresh capital. Low overhead and an inherent exit strategy are likely to help these vehicles regain prominence in the next hard market—with investors and reinsurers alike.

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