2012, an outstanding year for reinsurers

After a difficult year 2011, major reinsurers have managed to improve their results in 2012 thanks to an enabling economic environment and particularly mild climate. Munich Re, Swiss Re, Hannover Re, Lloyd’s, Berkshire Hathaway and Scor, the first six reinsurers, in terms of turnover, have exhibited outstanding results, well above analysts’ forecasts.
Used with permission from Microsoft(modified picture)

Premiums’ volumes of the six largest insurers have risen significantly up to 27.74% for Scor and 16.22% for Hannover Re. The results are driven by the same trend with a spectacular progression for the Lloyd’s and Munich Re.

While all combined ratios exceeded the 100% mark in 2011, those reported in 2012 have undergone a net decrease to be in a range between 80.7% for Swiss Re and 94.10% for Scor.

These good results are accounted for by:

  • a relatively high premium level. Reinsurance tariffs have undergone increases ranging from 2% to 6% on average,
  • the absence of major natural catastrophes. The year 2012 has been relatively hardly affected in comparison with the average value of the last ten years, and especially in 2011. Only hurricane Sandy, which occurred in late October in the United States, has affected reinsurers in the fourth quarter,
  • a prudent underwriting policy. Reinsurers were significantly more selective after the negative results of 2011,
  • a clearly-improving economic environment. This enabling environment has allowed reinsurers to improve their financial revenues in addition to the positive technical results.

Munich Re, profits up by 360%

In 2012, the turnover of the first world reinsurer reached 4.2 billion USD compared to 922 million USD a year earlier. The overall premiums volume has grown by 5% at 68.7 billion USD while reinsurance revenues have risen by 10.5% at 37.251 billion USD. Natural catastrophes affected Munich Re’s accounts at 1.7 billion USD. Hurricane Sandy alone costs 1.05 billion USD.

Swiss Re, on the right track

The Swiss reinsurer, which is celebrating its 150th anniversary this year, is on the right track to achieve the objectives of its 2011-2015 plan. Swiss Re’s performance exceeded by far analysts’ forecasts. Its net result has increased by 59.97% at 4.2 billion USD. Premiums are up by 14.74% at 25.4 billion USD, and combined ratio falling by 23.3 points to reach 80.7% in 2012, that is the best performance reported by the six largest reinsurers.

Hannover Re, notable growth

Hannover Re, the third world reinsurer, has posted a net result of 1. 134 billion USD, an increase of 44.45% compared to 2011.

Turnover has increased from 15.664 billion USD to 18.206 billion USD, that is, a rise of 16.22% over the previous year.

The Lloyd’s, back to profits

Photo credit: Lloyd’sLloyd’s headquarters

The limited natural catastrophes have allowed Lloyd’s three-century-old market to return to profits. From a loss of 798 million USD in 2011 to a profit of 4.480 billion USD in 2012, the Lloyd’s reports a higher result than that achieved by Munich Re and Swiss Re, becoming thus, the leading reinsurer in terms of profits.

Set at 15.785 billion USD, the turnover has been rising by 15.88%. Hurricane Sandy, the largest claim in 2012, accounts for 2.1 billion USD of the figures, while the combined ratio is sustains a net decline of 39.6 points in a single year.

Berkshire Hathaway, significant improvement

As for the other majors, the reinsurance activity of the group led by Warren Buffet, is improving considerably. At 15.5 billion USD, the turnover have increased by 3.87% while profits reached 656 million USD in 2012 after a loss of 570 million USD in 2011. Hurricane Sandy has affected the accounts of the conglomerate Berkshire Hathaway up to 1.1 billion USD.

Scor, good results

2012 has been particularly beneficial for Scor. Out of the six market leaders, it is the French reinsurer which achieved the best turnover growth +27.74%, far ahead of the 16.22% growth achieved by Hannover Re.

More than half of the 12.576 billion USD of the accounted turnover in 2012 that is 58%, is reported in Asia and on the American continent.

The combined ratio falls below the 100% mark at 94.10% in 2012.

Premiums, results and combined ratios of the top six reinsurers worldwide: 2011-2012

in millions USD

CompaniesPremiums2011/2012 growthResults2011/2012 growthCombined ratio
Munich Re1
37 25133 71710,50%4 244922360.3%91%113.80%
Swiss Re 2
25 44622 17614.74%4 2012 62659.97%80.70%104%
Hannover Re
18 20615 66416.22%1 13478544.45%95.80%104.30%
Lloyd’s 3
15 78513 62115.88%4 480-798-91%130.60%
Berkshire  Hathaway 4
15 54214 9633.87%659-570---
Scor 5
12 5769 84527.74%55342729.50%94.10%104.50%

1 Combined ratio relative to reinsurance only 2 Earned premiums. Combined ratio relative to property & casualty reinsurance 3 Results before tax. Combined ratio relative to reinsurance only 4 Earned premiums 5 Combined ratio relative to the non life segment : Scor P&C

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