Despite higher insured catastrophe losses in the U.S. in 2003, companies writing property catastrophe reinsurance realized very strong operating performance, according to a report published by Standard & Poor’s Ratings Services. S&P expects this level of earnings to continue in 2004.
In the U.S., measured insured losses from catastrophes (as reported by ISO’s Property Claim Services) were $12.8 billion in 2003. As a result, 2003 was the third costliest year since 1994. However, operating performance was still very strong. Because property catastrophe reinsurance is a global business, many companies insure risk in zones outside the U.S. As a result, losses incurred in the U.S. were mitigated by a diverse catastrophe portfolio that, in aggregate, performed well. In addition, many property catastrophe reinsurance companies writing business in the U.S. do so at high layers, which were not significantly affected by events in 2003.
With the cycle trending down, S&P is focused on those companies with the discipline to reduce exposure and writings. However, if any large catastrophes occur in 2004, this could harden the market and spawn another class of new start-ups.
The report, titled “Property Catastrophe Insurers Worldwide Perform Strongly in 2003,” is available on RatingsDirect, S&P’s Web-based credit research and analysis system. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling
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