Swiss Re anticpates improvement in p&c market

The insurance industry posted solid profits in 2005 despite record losses, according to comments made by Swiss Re’s senior economist Thomas Holzheu during the company’s mid-year Economic and Insurance Industry teleconference.Regarding the property and casualty insurance business, Holzheu says that 2005 is characterized by record losses from hurricanes Katrina, Rita, and Wilma. However he says the industry was resilient because solid underwriting and reinsurance preserved the industry’s surplus and profitability. “Going forward, the realization of higher catastrophe exposures increases capital requirements and property premium rates,” Holzheu says.In addition, he adds that globally both insurers and reinsurers bore a record US$83 billion of total insured property cat losses. Hurricane Katrina alone he says is estimated at US$45 billion. US P&C insurers he says, are expected to pay US$58 billion in losses for last year’s natural catastrophes.Despite the unprecedented cat losses, Holzheu says the combined ratio during 2005 was 101% and is expected to improve in 2006.The industry’s return on equity during 2005 Holzheu adds, was 11.6% and he anticipates that for 2006, it will be around 11%.”In the aftermath of the hurricane season, the pace of premium growth is likely to pick up slightly as commercial property prices firm,” Holzheu predicts.