Solid underwriting gains posted for 2013 by global reinsurers according to Fitch

Tornado hurricane storm catastrophe

Global reinsurers posted solid underwriting gains in 2013 as catastrophe-related losses were manageable and loss reserve development remained favourable, according to Fitch Ratings’ latest report.

Fitch reports the global reinsurers it tracked improved their underwriting combined ratio to 85.5% in 2013, from 89.3% in 2012.

Furthermore, the (re)insurance industry experienced below-average natural catastrophe insured losses of €22.43bn in 2013, compared with the 10-year average (2004-13) of €40.52bn and down from €47bn in 2012. The majority of losses were from flooding in Germany, central Europe and Canada as well as from severe thunderstorms in the US.

Solid underwriting profitability was, however, offset by an adverse change in unrealised investment gain/loss position on fixed maturities and capital market activity, resulting in shareholders’ equity growth of only 0.6% for non-life reinsurers in 2013. In addition, this group experienced only marginal growth in reinsurance premiums written as underwriting opportunities were limited.

Several individual reinsurance product lines, primarily longer-tail casualty and liability lines, continued to experience unfavourable reserve development during 2013. However, Fitch report earnings continue to be supported by surpluses from prior-year reserves. Reserve releases were equivalent to 6.1% of earned premiums in 2013, against 6.5% at end-2012.