Reinsurers ‘humbled, but most not broken’

In its recently issued global insurance report A.M. Best Co. concludes that “almost a year after three massive hurricanes — Katrina, Rita and Wilma — the global reinsurance industry is still struggling to manage its catastrophe exposure.”

The report, “Reinsurers Humbled, But Most Not Broken, By Hurricane Losses,” notes that their impact was felt worldwide.

“Reinsurers absorbed 60 percent of the record insured property losses,” Best said. “Bermuda and U.S.-based companies have borne the brunt so far, at $11 billion and $7 billion, respectively. Ultimate costs may not be known for some time.”

The 28-page report maintains that the underlying stability of the current reinsurance market remains tenuous, even though most reinsurers are financially positioned to meet their claim obligations. Since the 2005 hurricanes, the financial-strength ratings of 13 U.S. and Bermuda reinsurers have been downgraded or withdrawn after being downgraded, as of July 31, 2006. Hurricane losses were a factor in each of these actions. Four Bermuda-based companies also have been placed in run-off.

The new report also includes Best’s annual ranking of the Top 35 Global Reinsurance Groups based on gross written premiums for 2005. The top five include Munich Re, Swiss Re Group, Berkshire Hathaway Group, Hannover Re and Lloyd’s of London. But, as Best notes, “Swiss Re has since closed on its purchase of GE Insurance Solutions, which should help it reach the top when 2006 premiums are reported.”

An excerpt from the report, including a video, is available at www.bestweek.com.

Topics Reinsurance Hurricane