European reinsurers show restraint in 2004

In the face of the worst year on record for natural catastrophes, European reinsurers showed the necessary restraint in top-line growth to produce bottom-line results, according to the latest quarterly report by broker Benfield Group.In “Rewards of Restraint”, Benfield says gross premiums for the fgroup of top European reinsurers fell in 2004, “as companies were prepared to forego volume for profitability”, and reinsurers continued to restructure their portfolios. Only one top reinsurer, Alea, reported premium growth.Hannover Re felt the sting of last year’s catastrophe losses in both is reinsurance and program business segments, making for a 13% hit on yearend shareholders’ fund, Benfield reports. But the company also reported the lowest combined ratio of its peer group at 97%, with only Munich Re and Swiss Re also reporting ratios below 100%. Converium, not unexpectedly, reported the worst combined ratio at 118%, due mainly to reserve strengthening, although Alea’s reinsurance segment was close behind at 117.9%, also largely as a result of reserving.While investment income remained flat, overall investment results were sent sharply higher by a combination of rising realized capital gains and a drop in the cost of write-downs on impaired assets, the brokerage notes.