Atlas Magazine April 2010

Crisis? What crisis?

In spite of an unfavourable economic situation, great insurance and reinsurance groups have published their extremely satisfactory 2009 results. Munich Re, the world's reinsurance leader, has posted a net profit of 3.7 billion USD, with an increase of 62% comparing to 2008 and a turnover of 58.9 billion USD, that is, a 9.52% progression. With profits worth 6.1 billion USD in 2009, Lloyd's reports its best performance ever.

Axa has seen its results increase by more than 291% at 5.1 billion USD while Generali is posting a net profit on the rise by 52.1%. Hannover Re, Scor, Allianz have also announced very decent results.

The crisis is behind us. That is, in brief, the message conveyed through the publication of the insurance companies' balance sheets. In fact, insurance has not been totally spared by this recession. the premiums' collection, that is, the turnover has either stagnated or slowed down.

The good news comes from the profits achieved by most players. These profits are accounted for by the low 2009 loss ratio and by the financial markets' bounce-back. Efforts made by insurers to minimize their costs have finally paid off.

A perfect scenario would have been that these profits are allocated to consolidate the balance sheets which were strained by the 2008 financial tornado, instead of being distributed as dividends to the shareholders. Unfortunately, dividends are perceived today by the market as a sign of good health. That is why they should not be sacrificed.

Insurers are keen on preserving their shareholders during this time of uncertainty; that is how Axa and Allianz have respectively increased their per share dividend by 38% and 17% in 2009.

In Africa, where results are traditionally good, crisis has a name: the outstanding premiums which, if cumulated, often account for an entire year contributions.

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