Reduced demand, excess capital and strong competition have been pushing reinsurance premiums down for several years. Few leading reinsurers will look back on 1998 as a good year and most predict that circumstances will not change in 1999. Underwriting profitability is elusive and individual strategies to improve performance tend to be very similar, with diversification of markets and products and concentration on the more profitable life sector being common examples. Many of the largest reinsurers also claim that they have become far more risk selective, turning down those types of property business that they consider uneconomically rated. Sue Copeman surveys the leading reinsurers in 1999.

AXA Ré, which celebrates its 25th year of existence in 2000, reported a consolidated gross premium volume for 1998 of FFr 9.568 million. The increase of 5.27% over the previous year would have been higher - 8.93% - but for the adverse effect of exchange rates and, in particular, the decline of the dollar. Net income from underwriting before general expenses and investment income showed a loss of FFr 189 million, representing a deterioration of 290% compared with 1997.While premium income from traditional business fell, AXA compensated by developing new areas of underwriting. With difficult market conditions particularly affecting non-proportional treaties, AXA reduced its exposure in this area and increased its proportional business which now represents a significantly higher share of overall operations. It has focused on writing large property catastrophe quota-share treaties, backed by specific excess of loss protections. In a further reaction to declining rates and what it describes as a “dangerously lax approach towards exclusions and the risks associated with the Year 2000”, AXA cancelled an extensive amount of its casualty business. It also significantly reduced premium income from its facultative business, again in response to deterioration of conditions.

Despite these precautionary measures, AXA experienced a slight regression in its technical balance in 1998 which prompted further cut-backs on its treaty as well as facultative business in 1999. It hopes to replace this with new quota-share and programme business, mainly in the United States. It is also focusing on developing its life portfolio.

AXA Ré is now following the example of many of its competitors by starting to write insurance policies. It believes that, for some risks requiring multi-year, multi-branch and multi-territory solutions, global reinsurers are better placed than local insurers to handle significant risk transfer within the framework of either an insurance or reinsurance contract matter.

Employers Reinsurance Corporation
Part of GE Capital Services, itself a subsidiary of US General Electric Company, Employers Reinsurance Corporation (ERC) was the fourth largest reinsurer in the world in terms of net written premium (source: Standard & Poor's) in 1998. Founded in 1914 and bought by General Electric in 1984, its growth since then owes much to its policy of strategic acquisitions.

ERC continued to expand its operations and global presence in 1998 with a number of transactions.

• In early January, ERC added Industrial Risk Insurers to its corporate portfolio. In association with Hartford Steam Boiler & Inspection Co, ERC operates this as HSB Industrial Risk Insurers, focusing on the highly protected industrial risk market.
• Reflecting its perception of high growth potential in the US healthcare market, in October 1998, ERC completed the purchase of the Medical Protective Co, America's oldest professional liability insurer of physicians and dentists.
• Also in October, GE Global Insurance Holding Corporation acquired Kemper Reinsurance Company, a leading broker market reinsurer. This acquisition allowed it to combine Kemper and another ERC Group subsidiary, First Excess & Reinsurance Corporation, into a single significant North American broker market reinsurance company, with the combined entity being renamed GE Reinsurance Corporation. The London-based operations of Kemper Re are now part of ERC Frankona although GE Reinsurance sold off Kemper's Belgian arm, Kemper Europe Reassurances S.A., to Sirius International Insurance Corporation of Stockholm, part of the global technology and engineering group, ABB, in 1999.
• In late 1998, ERC also announced plans to acquire Eagle Star Reinsurance Co Ltd, a deal that was finalised earlier this year. Acquisitions have continued in 1999 with ERC's subsidiary, ERC Life, assuming the life and group reinsurance business of Phoenix Home Life Mutual Insurance Company. The deal makes ERC the second largest life reinsurer in the United States, based on 1998 new business reinsured.

ERC's expansion was reflected by a 20.2% increase in the group's net earnings for 1998, which grew from $648 million to $779m. Stockholders equity rose by 11.1% from $5.4billion to $6.0 billion, while statutory net premiums increased to $8.2billion.

ERC's presence is particularly strong in North America, where property/ casualty reinsurance net written premiums exceeded $2billion in 1998. The group is also strengthening its US life activities, increasing the volume of mortality risk reinsured by 130% last year. ERC sees capital management reinsurance as a key area for growth in 1999.
The group is also looking to expand in developing markets. In the Asian Pacific region, the group increased net written premiums by 21% in 1998 and, in Latin America, by 17%, opening new offices in both regions.

Everest Reinsurance Holdings Inc
Since its IPO in 1995, Everest Re has focused on diversifying both its products and distribution channels. Already established in the areas of general casualty, general property, marine, aviation and surety, in 1995 Everest began expanding its operations in the specialty casualty market, writing D&O, E&O and medical malpractice cover. More recently, to counter the competitive pressure in many of these lines, Everest has widened its scope still further. In 1997, it established an accident and health unit and also developed its non-standard motor and workers' compensation books. It also actively began seeking loss portfolio transfer opportunities, taking over segments of business from companies that wanted to exit a particular line.

Distributing on both a facultative and treaty basis gave Everest the flexibility in 1998 to reduce its facultative business when premiums reduced in this area and to take advantage of new treaty opportunities, particularly linked to its new business areas. Distribution on both a broker and direct basis, strong franchises in both the US and international markets, and an ability to deliver both insurance and reinsurance products have also contributed to flexibility.

In spite of the industry's problems, Everest Re succeeded in reducing its combined ratio from 104.0% in 1997 to 103.2% in 1998. Much of this improvement stemmed from the decision to be more discriminating and to decline a “substantial” amount of business that Everest felt was inadequately priced. On the down side, Everest was unable to replace all its rejected business with that offering better opportunities. Although its policy of product diversification helped to generate more premiums in its newer areas of business, overall gross premium declined by 2.7%. Despite the reduction in premium and the upward trend of paid losses, Everest managed to increase its net reserves by $135 million during the year. It also increased both pre and post tax investment income.

General & Cologne Re
General Re owns General Reinsurance Corporation and National Reinsurance Corporation, which together represent the largest US-domiciled professional property and casualty reinsurance group. General Re also owns a substantial shareholding in the oldest reinsurance company in the world, Cologne Re (the remaining shares are publicly traded).

In addition to its core business, General Re writes excess and surplus lines insurance through General Star Management Company, provides alternative risk solutions through Genesis Underwriting Management Company, provides reinsurance brokerage services through Herbert Clough, Inc., manages aviation insurance risks through United States Aviation Underwriters, Inc., and acts as a business development consultant and reinsurance intermediary through Ardent Risk Services, Inc. It also operates as a dealer in the swap and derivatives markets through General Re Financial Products Corporation and provides specialised investment services to the insurance industry through General Re-New England Asset Management, Inc. Its recent acquisition, DP Mann Ltd, operates through brokers at Lloyd's as syndicate 435, underwriting a diverse non-marine insurance and reinsurance account.

General Re Corporation became a wholly owned subsidiary of Berkshire Hathaway, Inc., a holding company owning a number of diverse subsidiaries, in December 1998. Berkshire Hathaway also owns (including stock it has an arrangement to buy) 82% of Cologne Re.

Berkshire Hathaway chairman, Warren Buffett believes that the new ownership will give General Re the ability to write and retain business that is profitable in the long-term without worrying about short term volatility which could otherwise affect credit ratings and p/e ratios. It should also allow General & Cologne Re to accelerate their expansion in potentially high growth international markets. Broadening product lines and widening geographical coverage are key targets for the future.

General Re's North American property/casualty operations underwrite predominantly excess of loss reinsurance across various lines of business. Its international property/casualty operations write quota share and excess of loss reinsurance for risks throughout the world, while its global life/health operations reinsure risks in North America and throughout the world. Cologne Re and its subsidiaries primarily conduct its international property/casualty and global life/health businesses.

Following the Berkshire Hathaway take-over, General Re has not produced a separate annual report for 1998. For the first nine months of the year, it recorded comprehensive income of $847million, compared to $1,421 million for the same period in 1997. Comprehensive income, or “owners' earnings”, consists of net income, unrealised changes in investment values, and foreign currency translation gains and losses.

For the first three quarters of 1998, General Re's consolidated underwriting combined ratio was 101.3%, compared with 100.6% for the same period in 1997. Consolidated net premiums written were $4,524million, a decrease of 9.8% from the $5,017million of net premiums written in the same period of 1997. Adjusted for the effects of foreign exchange and non-traditional business, consolidated traditional premiums decreased by 0.2% .General Re's 1998 net investment income after tax remained at the same level as for 1997 - around $975m.

Gerling Global Re
Gerling Global Re summarised its financial year 1997/98 as a backdrop where competition made it “almost impossible to secure premiums commensurate with risks”. While the slide in non-life premiums was particularly steep in the German market, reinsurers felt the trend equally in other European markets.GGIR Bridgetown, Gerling Global's specialist financial reinsurance subsidiary formed in early 1997, has made a substantial contribution to the group's growth in premium income. In 1997/98, the highest growth was in liability/personal accident business. This grew by 58.3% of which GGIR Bridgetown generated nearly half. Gerling Global Re's latest figures (in common with some other reinsurers, it has now adopted calendar year reporting) show that CGIR Bridgetown contributed two-thirds of its total 9.3% increase in premium volume for 1998.

Gerling Global Re has also significantly expanded its international operations in line with its strategy to develop as a major global player; in 1998, foreign business accounted for well over half of its total gross premium income. Having scaled down its US operations substantially in the early 1980s, principally because of heavy pollution claims, it is now building a significant US presence. Following the formation of Gerling Global Reinsurance Corporation of America, the group has acquired both US Constitution Re and, earlier this year, the new and renewal business of TIG Re's North American facultative division from TIG Holdings, a subsidiary of Toronto-based Fairfax Financial Holdings. As well as targeting the US, Gerling Global Re also sees high potential for premium growth in developing markets.

Hannover Re Group
Hannover Re achieved its fourth consecutive record result in 1998 when gross premium income increased by 10.6%, largely because of a 39.7% increase in life and health business. The group's largest single market is the US with a 28.8% share of its total business in 1998. Income from North America will be boosted further this year with the acquisition of Clarendon Insurance Group, effective 1 January 1999. Although Clarendon is a direct insurer, specialising in programme business, Hannover says that the acquisition does not constitute its entry into the primary insurance sector; “rather it represents the cultivation of a niche segment which bears a very close affinity to reinsurance and will help us to further diversify our earnings base.”

The group has focused on increasing its international portfolio of life and health business, specialising in two particular areas that centre on a financing element. These involve the financing of acquisition costs for new business in life and annuity insurance and the assumption of entire existing life, health or personal accident portfolios, known as block assumption transactions or (BATs). Developed initially for the US market, BATs involve quota share reinsurance treaties on clients' in-force business, enabling them to realise future profits in advance.

Hannover has completed more than 40 BATs since their introduction in 1993, including 11 in 1998 which represented a total premium volume of DM428 million and a financial outlay of DM137 million in the US, Germany, the UK, Malaysia and South Africa. For the first time, in 1998, Hannover managed the growing financial expenditure connected with the writing of new business and acceptance of BATs with two different capital market transactions. These allowed it to transfer its own prefinancing expenditure to the international capital markets in order to create further capacity for growth in what it sees as a high-potential market.Hannover is less optimistic about the prospects for property/casualty reinsurance, forecasting continued deterioration in market conditions for 1999 and the continued need for a highly selective approach to underwriting, even at the price of reduced premium volume. However, it expects strong growth for financial reinsurance.

While Lloyd's as a single entity features among the lists of top reinsurers, the fact that it comprises a number of syndicates with differing views and participation in various areas makes it is difficult to define a single strategy or speciality for Lloyd's as a whole. However, there are a number of key factors that apply to the market generally.

Around 3.5% of the world's reinsurance is placed at Lloyd's, with around 32% of Lloyd's total capital provided by professional insurance and reinsurance companies. For many participants, an important attraction is gaining immediate access to international insurance markets. Lloyd's underwrites business in more than 100 territories world-wide and approximately half of all the London market's international premiums are underwritten at Lloyd's.

Another advantage is that Lloyd's provides entry to the London market at a relatively low cost and without risk to reputation - establishing a separate Lloyd's operating unit which is distinct from the rest of the company means that if it fares badly this will not taint the group as a wholeLloyd's projected allocated underwriting capacity for 1999 is £9.87 billion, compared with £10.17 billion for 1998. Of this total, some £7.17 billion, equivalent to 73% - an increase of 13% on the 1998 total of £6.12 billion - is limited liability capacity supplied by 668 limited liability members representing both companies and individuals who have converted to limited liability. The balance of £2.7 billion, 27%, (1998 £4.05 billion, 40%) will be supplied by individual members continuing to trade on the basis of unlimited liability.

Lloyd's business is split into four main areas: marine (20%) - the liability risks of nearly all the world's ocean going ships are reinsured at Lloyd's; non-marine (54%); aviation (10%) - Lloyd's writes approximately 22% of the world's aviation business, and motor (16%).Lloyd's total profit for 1996 (the most recently reported year) was £748 million ($1,242 million).

Collective strategies include a commitment to electronic trading and Lloyd's is working with RINET (the Reinsurance and Insurance NETwork), to establish a London pilot for a new insurance and reinsurance e-trading initiative - Trader 2000. This involves drawing upon the experience RINET gained through working with Rebus Electronic Business (a division of Rebus Group PLC) in its move to introduce Trader 2000 to the RINET community. Lloyd's is now supporting a pilot of Trader 2000 to extend its use to the Lloyd's and the London market.

Reinsurers are already well acquainted with Trader 2000. For example, Munich Re, a member of the RINET group, has used it for some time. Other early users include Swiss Re and Zurich Re.

Munich Re Group
Munich Re, founded in Germany in 1880, is the world's largest reinsurance group, with offices at over 60 locations. In addition to its extensive reinsurance activities, it also owns direct insurer ERGO Insurance Group, formed by the merger of its subsidiaries VICTORIA, Hamburg-Mannheimer, DKV and D.A.S.Following the spate of recent mergers in the reinsurance sector which has produced a number of large competitors, Munich Re is focusing on new products and services, for example financial reinsurance for insurers and alternative risk transfer mechanisms.

Traditionally, Munich Re's financial year's end has been 30 June. However, following publication of its annual results for the period 1 July 1997 to 30 June 1998, the group has now changed over to calendar year reporting, bringing it in line with most other European companies. Therefore, its 1998 results reflect a short business year; they include the parent company's reinsurance underwriting business for the whole of 1998 but only reflect investment earnings for the period from 1 July to 31 December 1998.

During 1998, the group's premium income from reinsurance of DM24.989 billion was only slightly above that of 1997 (DM24.944billion), with the lack of any substantial growth attributed to both unfavourable developments in exchange rates and a more difficult competitive environment. Net premium income from reinsurance business rose to DM22.0 billion (1997: DM21.7 billion).

Munich Re's biggest class of reinsurance business in terms of premium volume was fire, followed by life. Owing to higher claims costs for natural catastrophes and other major losses, the reinsurance underwriting result deteriorated to DM404 million, compared to DM44million in the previous year. However, Munich Re's largest reinsurance subsidiary, American Re, increased its gross premium income slightly to $3.1billion and also improved its underwriting result from $221million to $226million, despite increased claims from natural catastrophe losses. Liability, motor, personal accident/health, marine/aviation and engineering were all classes that produced an underwriting loss.

Munich Re predicts limited opportunities for organic growth in traditional reinsurance business in the current year, due to strong competition, and expects its reinsurance premium income to continue at the same level as 1998. Competition also seems likely to put continued pressure on its reinsurance underwriting result, although the incidence of natural catastrophes and other major losses will also have a key effect here.

Since its inception in November 1993, PartnerRe has developed from a specialised property catastrophe reinsurer to a diversified group. Two strategic acquisitions that have significantly contributed to its growth are SAFR, France, in 1997 and, more recently in December 1998, Winterthur Re. The latter transaction has both expanded PartnerRe's global capabilities in specialised lines of business and also reinforced its presence in the US reinsurance market, doubling PartnerRe's size in terms of premiums written and number of employees, and more than doubling its total assets from $3.6 billion to over $7.8 billion.

Up to mid 1997, catastrophe business accounted for 100% of PartnerRe's net premiums. It has diversified to the extent that, while still focusing largely on non-life sectors, catastrophe business represented only a quarter of its net premiums in 1998 and will further decrease as a percentage in 1999. Proportional business is increasingly taking a greater share than non-proportional, accounting for 62% of all business last year. Most of PartnerRe's business is treaty although the share of facultative business rose from one per cent in 1997 to 6% last year. In 1998, net premiums for life business were $46.6 million, compared to $29.1million in the previous year.

PartnerRe's 1998 results were boosted by the integration of SAFR which had only featured in the last six months of 1997. Net premiums written reached $687.0 million, compared to $427.8 million in 1997 and total revenues for the year were $879.6 million, comprising $685.6 million of net premiums earned, $169.4 million investment income and realised gains on sale of investments of $23.7 million. Over the year, PartnerRe achieved a combined ratio of 86.5%, markedly better than some of its competitors.

St Paul Re
The acquisition by its parent company, The St Paul Companies Inc, of USF&G whose reinsurance operations accounted for $345 million in annual net written premiums, boosted the business of St Paul Re in 1998, particularly in the areas of non-traditional finite risk reinsurance and the alternative risk transfer market. St Paul Re plans to build on this to develop new customised products.

Completing an initiative begun by F&G Re in 1997, St Paul Re finalised a $54 million securitisation transaction that provides additional capacity for a defined portfolio of US property catastrophe reinsurance contracts, funding Mosaic Re, a special purpose offshore reinsurer. It envisages further development of securitised reinsurance vehicles to provide additional reinsurance capacity in the future.

St Paul Re specialises in non-life business - 92% treaty and 8% facultative - with 65% excess of loss and 35% proportional. Over half of this, 57%, comes from North America. St Paul Re mainly obtains business through intermediaries although, in certain markets and for certain lines of reinsurance, it operates direct. Through its subsidiary. Discover Re Managers, Inc., it underwrites primary insurance and reinsurance and provides related insurance products and services to self-insured companies and insurance pools, in addition to ceding to and reinsuring captive insurers.

St Paul Re's 1998 written premiums of $1.06 billion were down 12% from its 1997 premium volume of $1.20 billion. The company attributes this decline to continuing worldwide erosion of rates, increased industry capacity and competition from new product offerings from the capital markets. St Paul Re has withdrawn from some property reinsurance business on the grounds of inadequate pricing; international and marine premiums also fell in 1998, reflecting not only the soft market but also reduced demand for reinsurance in these sectors. Discover Re's written premiums of $39 million in 1998 were down $6 million from its 1997 total.

Despite the market's problems and St Paul Re's reduction in premium volume, the company managed to improve its combined ratio slightly, bringing this down from 99.0 in 1997 to 98.7 last year. Although catastrophe losses rose substantially in 1998 to $86 million - principally as a result of Hurricane Georges - compared to $3 million in 1997, favourable loss development on prior years' business offset this.

Like other major reinsurers, St Paul Re does not foresee any improvement in market conditions in the short term and believes that deteriorating price levels will continue. It is therefore looking to underwrite more business in specialty areas that offer the greatest profit potential. For example, in July 1999, it formed a new international healthcare unit, focusing on reinsuring health plans, health insurers, managed care organisations and other health care financing organisations outside the US. Further diversification is likely to be a key strategy for the future. Already, almost one-fifth of St Paul Re's net written premiums consists of “non-traditional” reinsurance that combines elements of traditional risk transfer with measures that provide a level of financial risk protection, such as currency exchange or credit risks.

St Paul Re accounts for 16% of The St Paul Companies' property/casualty net written premiums. Since the group produces consolidated accounts, it is not possible to identify meaningful “key figures” relating only to St Paul Re.

SCOR Group
French reinsurance group SCOR, in common with some other reinsurers, sacrificed premium income to profitability on its property business in 1998, adopting a cautious approach to risk selection and withdrawing or reducing its participation in some contracts, especially industrial risks. Despite this, costly weather-related losses coupled by the general decline in premium rates reduced profits from its property-related business compared to previous years. Life reinsurance results were better, with premium income rising 21% at current exchange rates.

While SCOR's gross premium income for 1998 - FFr15.368 million - showed a small drop from the 1997 figure of FFr 15.447 million, exchange rate variations over the year with the value of non-European currencies falling against the French franc and euro, meant that, after restatement, premium income was up 4.5% from 1997. SCOR's policy of tighter risk selection led to a 5.6% drop in non-life premiums. This was offset by a 21% rise in personal life reinsurance activity.

Last year, for the first time, SCOR generated more premium income in North America (46%) than in Europe (40%). The group attributes this to the growth in non-traditional business written by its subsidiary Commercial Risk Partners in Bermuda which has experienced strong demand from the American market.

The strong competition in the reinsurance sector means that SCOR, in common with other reinsurers, is focusing on specific strategies to differentiate itself, as well as expansion in new markets. SCOR claims that it has gained a competitive advantage by exploiting new technology, including web-based business transactions with its customers and brokers. It has also developed new products and entered new markets to the extent that these now account for around 25% of its premium income.

Despite the contribution from its life reinsurance and non-traditional activities, SCOR had an underwriting loss of FFr113 million in 1998, compared to a profit of FFr281 million in 1997. Underlying investment income was also down because of generally lower interest rates and the impact of exchange rate variations. However, SCOR's investment results were lifted by its 45.18% shareholding in COFACE which performed well during the year, with credit insurance apparently cushioned from the effects of international financial problems.

SCOR predicts a bottoming-out in the reinsurance cycle in 1999-2000, aggravated by Y2K related uncertainty. In the meantime, it is prepared to continue to reduce its participation in low-rated business and expects its premium income to drop in 1999 as a result, with the expectation, however, of regaining ground when the cycle starts to move upwards.

Swiss Reinsurance Company
Founded in 1863 in Zurich, Switzerland, the Swiss Re Group is the world's second largest reinsurer. It has offices in more than 30 countries and has recently pursued a fairly aggressive policy of acquisition and consolidation. For example, its 1998 acquisitions included Falcon Asset Management (Baltimore-based asset and liability management company), NCM (credit insurer, Netherlands), Reaseguros Alianza S.A. (reinsurer, Mexico) and Life Re Corporation (reinsurer, US). Swiss Re's strategic commitment to focus on its core business of managing capital and risk also led to the sale of its wholly owned company Audatex Holding AG, a specialist in computerised assessment of vehicle repair costs, in April 1998.
In common with other reinsurers, Swiss Re suffered from the effects of the depression in non-life business in 1998. Although its overall results were good - gross profit increased by 18% to CHF2,504 million - this was mainly due to strong investment returns and good life results. The 4% increase in gross premiums for 1998 was also largely attributable to life business. Non-life operations fared less well, affected by negative results in US medical business (which the group has now discontinued as an active line of business), a general soft market environment and higher expenses. Although catastrophe claims were higher in 1998 than in recent years, Swiss Re was able to absorb these through its reserves.

Nevertheless, Swiss Re did manage to increase its non-life premiums during the year. Its acquisitions offset the effect of the soft underwriting environment and a negative currency adjustment. However, the technical result of CHFr916 million was lower than the previous year (CHFr1.3 billion) and Swiss Re's combined ratio rose four points to 114% although it is two points lower at 112% if the now discontinued US medical business is excluded. The expense ratio increased to 34% from 31% as premium growth declined and expenses rose.

Life business accounted for a slightly increased share of total gross premiums in 1998 - 21% compared to 20% in the previous year. In geographic terms, most of Swiss Re's business, more than 85%, derives from Europe and North America.

Looking ahead, Swiss Re expects more of the same for 1999, that is strong investment returns, good results for life operations - and another poor year for non-life business due to the prevailing soft market. It hopes to counter the effects of the latter with a groupwide initiative of examining its lowest-valued contracts, reducing capacity for natural hazards where prices are inadequate, and increasing productivity.

Transatlantic Holdings
Against a background of competitive pricing, continued consolidation and the increasing preference of clients for non-proportional reinsurance, Transatlantic Holdings achieved record earnings in 1998, with net income increasing 33% to $248 million, compared to $186 million in the previous year. Excluding the after-tax impact of losses from Hurricane Georges and realised capital gains, 1998 income totalled $182 million, an 11% increase. The group had a combined expense ratio of 101.3 in 1998, compared to 100.1 in 1997.

The group comprises three subsidiaries, Transatlantic Reinsurance Company, Trans Re Zurich (TRZ) and Putnam Reinsurance Company, writing treaty and facultative business. Its increase in net premiums written of 8% to $1.39 billion in 1998 reflected growth for both domestic and international operations.

• In the US, Transatlantic's net premiums grew by 6% to $712 million, with the increase concentrated in selected lines. Specialty casualty business, including medical malpractice, other professional liability, accident and health and directors' and officers' liability, contributed to this domestic growth, while in other casualty classes the group focused on developing specific products areas such as personal motor, ocean marine and aerospace, and credit and surety.• Internationally, new premiums written increased by nine per cent to $682 million in 1998, accounting for almost half (49%) of Transatlantic's total premium volume. The group has benefited from the international presence of American International Group, Inc. (AIG) which increased its shareholding in Transatlantic to 52% in 1998 and has helped the group to gain access to new international markets. Early in 1998, Transatlantic opened representative offices in Rio de Janeiro and Shanghai.

Worldwide, treaty reinsurance increased in 1998, totalling 95% of net premiums written, with the balance representing facultative accounts. Casualty net premiums written increased during the year and now represent 71% of the group's volume, with property business accounting for the remainder.

Zurich Re
Following the take-over of the insurance operations of BAT and the subsequent formation of Zurich Financial Services, Zurich Re has focused on creating a global organisation, integrating its independent business units. This involved sale of Eagle Star's reinsurance operation to Employers Re and, following an unsuccessful management buy-out attempt, closure of its London office, transferring the reinsurance business to its main business units in Zurich, Cologne and New York. It is also seeking to increase US and Australian business by establishing new offices in these regions.

Building the global business unit of Zurich Re also involved the legal separation of Centre Solutions, New York, from Zurich Re (North America). While Zurich Re produced, for the first time, a pro forma consolidation of its 1998 business results for its operating entities, the divestment makes any direct comparison invalid.On a relative basis, Zurich Re's gross written premiums experienced a relatively modest growth of 4% last year. Its combined ratio was relatively unchanged compared to 1997, but it improved its incurred loss ratio from 82% to 77%, largely due to its increased relative weight of structured/finite reinsurance business and its accrual of positive experience account balances.

Despite the economic problems in the Asia/Pacific region, Zurich Re has significantly expanded its presence there and, in 1998, doubled its portfolio in the area. In the North American market last year, Zurich Re (North America) was the lead reinsurer on treaties approximating 87% of the premium it underwrote. It is also seeking to build upon its Latin American presence.

Sue Copeman is a freelance insurance writer. She is the editor of the Global Reinsurance London market edition 2000. Ms Copeman is also the author of The Effect of Mergers and Acquisitions on Insurers' Market Share Worldwide.