Global reinsurers posted solid underwriting gains in 2013, as catastrophe-related losses were manageable and loss reserve development remained favourable, according to Fitch Ratings.
The global reinsurers that Fitch tracks improved their underwriting combined ratio to 85.5 percent in 2013, from 89.3 percent in 2012.
The (re)insurance industry experienced below-average natural catastrophe insured losses of $31 billion in 2013, compared with the 10-year average (2004-2013) of $56 billion and down from $65 billion in 2012.
The majority of losses were from flooding in Germany, central Europe and Canada as well as from severe thunderstorms in the US.
This strong underwriting profitability was 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 percent 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 percent of earned premiums in 2013, against 6.5 percent at the end of 2012.
