Reinsurers showed “modest” top line growth on “modest” rate increases in 2012 as the industry rebounded from Superstorm Sandy losses, according a report issued by Fitch Ratings on Monday.
Reported shareholders’ equity for the 11 reinsurers in the Fitch report grew by 7.6% to approximately $40 billion by year-end 2012. The rating agency added equity increases were limited as the industry avoided a hard market boost from Sandy since the storm was “mostly limited to an earnings event for the group.”
“The group showed modest top-line growth with earned premiums increasing by 2.6% over the previous year as the group benefited from modest rate increases in catastrophe-exposed lines and geographies,” the report adds. “Positive pricing momentum was also seen in certain primary casualty during the year, with the reinsurance group also deriving a modest benefit as a result.”
And what helped the “modet” boost in equity for the reinsurers during the period? Catastrophe losses that added a relatively “modest” 11.4 points to the group’s combined ratio, Fitch said.
That was, however, significantly better than the 34.8 point average combined ratio experience in 2011.
Overall, the group of 11 reinsurers generated a $3.6 billion operating gain during the year versus a $1.3 billion operating loss in 2011, Fitch said. The report added that the group also posted a 9.4% operating return on equity (ROAE) in 2012, with five of the 11 — Everest Re Group, Ltd. Montpelier Re Holding Ltd. RenaissanceRe Holdings Ltd. PartnerRe Ltd. and Platinum Underwriters Holdings, Ltd. — reporting “double-digit” ROAE during the year.
