Report: U.S. Reinsurance Market Posts 105.5% Combined Ratio in 2004

June 23, 2005

Forty reinsurance companies reported net written premiums of $30.1 billion for 2004, showing a combined ratio of 105.5 percent in the Reinsurance Association of America’s “Reinsurance Underwriting Review: 2004 Industry Results.”

The report includes industry aggregate data and summarizes underwriting experience, operating results, ceded reinsurance & recoverables, reserve development & leverage, and the invested assets of 40 reinsurance companies.

For 2004, the 40 organizations reported premiums earned of $29.8 billion, loss and loss adjustment expenses of $23.4 billion, commission and broker expenses of $5.9 billion, and other underwriting expenses of $2.2 billion.

The figures indicate a weighted loss ratio of 78.6 percent, commission and broker ratio of 19.7 percent, and other underwriting expense ratio of 7.3 percent, resulting in the combined ratio of 105.5 percent. As a group, the reinsurance companies reported policyholders’ surplus of $64.3 billion. This same group of reinsurers reported a return on equity of 6.0 percent, an investment yield of 3.4, net-net reinsurance exposure that was 3.1 percent of surplus and net leverage of 217.9 percent.

Since 1980, the RAA has reported the underwriting results of the nation’s major property/casualty reinsurers in its annual Reinsurance Underwriting Review. The objective is to provide the insurance industry, as well as the general public, with useful and timely information on the U. S. reinsurance market. Copies of the Reinsurance Underwriting Review are available for purchase at: http://www.reinsurance.org or by calling (800) 259-0199.

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