American Re Corp., the U.S. subsidiary of Munich Re, announced a 1st quarter loss of $58.9 million, compared with profits of $57 million for the same period last year.
“The result for the first quarter of 2000 includes a substantially larger underwriting loss than in 1999, reflecting higher provisions for losses in the current accident year than in the comparable period last year due to still weak conditions in the U.S. market. In addition, the first quarter of 2000 includes $30.6 million of after-tax losses from natural catastrophes, including the December 1999 storms in Europe. It also includes $31.5 million of after-tax losses on several finite risk insurance/reinsurance contracts,” said the announcement.
Net premiums written during the period declined from $757.5 million to $747.7 million for the quarter, but American Re attributed this “to the Company’s non-renewal of inadequately priced U.S. business.” Parent, Munich Re, has also announced that it won’t renew, or offer to underwrite, business which it feels is inadequately priced.
The losses are in part a result of this strategy, and thus reflect a certain strength rather than weakness. American Re’s total assets in fact grew to $14.5 billion during the quarter.
In assessing the results President and CEO, Edward J. Noonan stated that changes in market conditions presaged an upward trend. “These actions and those of other marketplace participants are having some ameliorative effect on the market, where prices for property coverages are firming and those for casualty coverages are beginning to show modest gains. It will take some time before these improvements filter through to American Re’s results, but the trends are now in better directions,” said Noonan in the announcement.
He also indicated that American Re would continue the current policy, “increasing prices and non-renewing inadequately priced business, until rates reach acceptable levels again.”
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