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April 22 (The following statement was released by the rating agency)
Fitch Ratings says in a new report that global reinsurers posted solid underwriting gains in 2013, as catastrophe-related losses were manageable and loss reserve development remained favourable. The global reinsurers that Fitch tracks improved their underwriting combined ratio to 85.5% in 2013, from 89.3% in 2012. The (re)insurance industry experienced below-average natural catastrophe insured losses of USD31bn in 2013, compared with the 10-year average (2004-2013) of USD56bn and down from USD65bn in 2012. The majority of losses were from flooding in Germany, central Europe and Canada as well as from severe thunderstorms in the US.
Solid underwriting profitability was, however, offset by an adverse change in unrealised investment gain/loss position on fixed maturities and capital market activity, resulting in shareholders' equity growth of only 0.6% for non-life reinsurers in 2013. In addition, this group experienced only marginal growth in reinsurance premiums written as underwriting opportunities were limited.
Several individual reinsurance product lines, primarily longer-tail casualty and liability lines, continued to experience unfavourable reserve development during 2013. However, earnings continue to be supported by surpluses from prior-year reserves. Reserve releases were equivalent to 6.1% of earned premiums in 2013, against 6.5% at end-2012.
The report, entitled "Global Reinsurers' 2013 Financial Results", is available on www.fitchratings.com or by clicking the link above.
Link to Fitch Ratings' Report: Global Reinsurers' 2013 Financial Results