A Good 1st Quarter For International Insurers, As Earnings Reports Show Increase

May 10, 2000

ACE Ltd. isn’t the only insurance company to see earnings increase in the 1st quarter. Despite some difficulties, notably the December storms in Europe, most earnings reports have been positive. It seems most of the industry is looking back on the first three months of the year with satisfaction and some relief. Recent reports include the following:

Skandia: Sweden’s largest insurer and financial services group announced that its profits had more than doubled in the first quarter to $226.3 million.

The results were boosted by strong sales in the U.S. market. Skandia is now the leading provider of variable annuities, and saw sales increase 90 percent to $2.72 billion; mutual fund savings products increased 158 percent to $1.62 billion.

CEO Lars-Eric Petersson attributed Skandia’s remarkable growth – sales have risen for the last 20 quarters in succession – to a successful management strategy that has restructured “the Skandia group into a pure-play savings and assets management company.”

Partner Re: While the Bermuda based reinsurer registered net gains in premiums written from $408 million to $440 million, its total revenues decreased from $392 million to $358 million for the period.

Losses were mainly in investment income and left a net pre-tax figure of $23.3 million. Earnings per share were also affected by the repurchase of 109,900 shares during the period.

Commenting on the results, CEO Herbert N. Haag said he expected internal restructuring to improve earnings in future quarters. “In this quarter, the difficult 1999 underwriting year continued to influence results, including some adverse development from the European storms at the end of December 1999,” Haag stated.

AGF: Despite the storms’ impact, AGF, the French subsidiary of Allianz made a preliminary announcement that it expected to show a 15 percent increase in gross revenues for the quarter.

AGF has already paid out 4.4 billion francs ($603 million) for the December storms. CEO Antoine Jeancourt-Galignani in a radio interview, noted that the storms cost “is higher than we thought a few months ago,” and indicated that premiums would be increased in the second half of the year.

CGU: About to complete its merger with Norwich Union, CGU announced good results for the 1st quarter with pre-tax operating profits topping £234 million ($365 million) up from £190 million ($296.4 million) for the same period last year.

Good results were seen in all sectors, life, asset management and general insurance (p/c), where profits rose 46 percent..

CEO Bob Scott indicated that the merger plans with Norwich were on schedule, and should be implemented by the end of the month. CGU is in talks with French bank Société Generale to increase its bancassurance network in that country, but has yet to confirm a buyer for its U.S. p/c business.

Swiss Life: Finally, Switzerland’s biggest life insurer announced a 42 percent increase in net operating profits for the year 1999 to SFr. 387 million ($224 million), and announced that it was seeking to expand in the U.K., Germany and France.

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