U.S. Reinsurers’s 2003 Profit Exceeds Us$3 Billion

Last year, U.S. reinsurers saw net profit grow by almost 500% to US$3.08 billion compared with the US$628 million posted the year prior. The financial result of the U.S. reinsurance industry is calculated based on company data collected by the Reinsurance Association of America (RAA), which represents 29 domestic companies.

Substantially improved underwriting results were the key to the sector’s improved financial health, with reinsurers posting a combined ratio of 101.2%, showing significant improvement on the 121.3% ratio posted for 2002. The loss ratio dropped last year to 74.0%, from the whopping 93.7% ratio shown for the year prior, while expenses were down slightly to 27.2% from the 27.6% ratio attributed to the 2002 financial year. Overall, the companies posted an underwriting loss for 2003 of US$564 million, a significant improvement on the US$6.4 billion loss reported the year previous.

Reinsurers net written premiums rose moderately over 2003 to US$30.6 billion from US$29.5 billion generated in 2002. Net earned premiums clocked in at US$29.8 billion for 2003 compared with the US$27.2 billion reported the year prior.

However, investment income slumped during 2003, coming in at US$5.6 billion versus the US$6.2 billion disclosed for 2002. Income taxes also took a big chunk out of profits, totaling US$2.1 billion for 2003 compared with just US$22 million for the year prior.

Top sector performers included Berkshire Hathaway’s National Indemnity and General Re, which posted net income of US$2.2 billion and US$1.2 billion respectively. American Re, part of Munich Re, also showed a strong result with net income of US$462 million for the year. On the other end of the spectrum were Employers Re, posting a net loss of US$741 million, Swiss Re America with a net loss of US$385 million, and SCOR U.S. Group with a loss of US$273 million.