However some firms’ profits improved
The latest round of results from some US-listed (re)insurers showed the strains of the heavy losses the industry has been subjected to since the beginning of the year, with both first half and second quarter profits falling. But others managed to grow profits.
US reinsurance group Transatlantic Holdings’ first half profits dipped 32% to $126.4m from $187.5m in the same period of 2009. The company’s second quarter profit was almost flat, however, at $110m in 2010 versus $112.3m in 2009.
Transatlantic attributed the decline in half year income mainly to $157m of net pre-tax catastrophe costs. These were partially offset by related tax benefits of $40m.
Accordingly, Transatlantic’s first half 2010 combined ratio increased to 101.8% from 94.3% in the same period of 2009. The second quarter combined ratio increased to 96.9% from 93.4%.
Bermuda-based reinsurer Montpelier Re’s first half net income dropped 62% to £79.8m from £213m in 2009, while its second quarter net income was down 56% to $69.9m from $159m. Montpelier’s first-half 2010 combined ratio spiked to 92.7% from 67.6%, although the second quarter combined ratio declined to 59.8% from 61.5%.
However, Bermuda-based insurance and reinsurance conglomerate Arch Capital Group bucked the trend set by Transatlantic and Montpelier. It enjoyed a 53% increase in first half 2010 net income to $447.5m from $292m. Second quarter net income was up 55% to $237m from $152m. The 2010 results were boosted by lower net impairment losses than those seen in 2009 and net foreign exchange gains of $48.6m and $87.2m for the quarter and the half respectively, compared with losses of $53.7m and $28.5m for the second quarter and first half of 2009.
Arch Capital Group as a whole has a different business mix to Transatlantic and Montpelier, as it is more heavily weighted to insurance than reinsurance business. Insurance business accounted for $422.8m or nearly 68%, of Arch’s Q2 net premiums written.
US-based insurance and reinsurance group WR Berkley also enjoyed an increase in first half net income, which was up nearly 200% to $228.8m from $77m in 2009. The results were helped by the fact that 2010 lacked 2009’s $62.9m net investment loss, instead showing a realised investment profit of $17.4m.
Underwriting performance at WR Berkley remained steady in the first half of 2010 compared with the same period last year. The combined ratio dropped slightly to 94.2% from 94.6%.
Like Arch, WR Berkley is also heavily weighted towards insurance – only 11% of the company’s second-quarter net written premium was derived from reinsurance.
Life reinsurer RGA was insulated fro the natural catastrophe losses that affected its peers on the non-life side. Nevertheless, it had mixed fortunes in the first half of 2010. Net profits were up 41% to $249.5m from $176.5m for the half, but fell 17% in the second quarter to $127m from $153.2m.