ABIR CY 2011 Global Underwriting Results; Risk Spreading, Pooling and Diversification Work

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Association of Bermuda Insurers and Reinsurers

Apr 15, 2012, 06:00 ET

HAMILTON, Bermuda, April 15, 2012 /PRNewswire/ -- The Association of Bermuda Insurers and Reinsurers (ABIR) today released the 2011 global underwriting results for its member (re)insurers. Twenty one of 22 member (re)insurers participated in this 2011 report. The companies write insurance and reinsurance from underwriting centers in Bermuda, Europe, Asia, and North and South America. The 21 (re)insurers wrote nearly $65 billion (US) in global gross written premium (up from $62 Billion in 2010) on a capital and surplus base of nearly $89 billion (down slightly from 2010)(i). They reported net income of nearly $1.5 billion, down from $11.4 billion in 2010. The gross premium to equity ratio for the group as a whole was .73 to 1.

Year 2011 was characterized by record setting, global catastrophe losses including those in Australia, Japan, New Zealand, and Thailand. Despite these losses, the shareholder's equity of the ABIR members held steady at nearly $90 billion. "It's remarkable that the (re)insurers in the ABIR membership could absorb record setting catastrophe losses yet on average continue to maintain a steady, solid capital base. This accomplishment is a testament to the underwriting discipline and diversification of business that makes this market strong," noted Bradley Kading, ABIR President and Executive Director.

"One of the great stories of the mega cat loss year of 2011, is that global reinsurers absorbed 45% of the $105 billion in record setting catastrophe losses. Risk spreading, pooling and diversification work; but protectionist regulations impede this risk spreading. If protectionism prevails through either regulation or tax policy the insurance markets will be damaged as reinsurance supply will be fragmented and more difficult to obtain," Kading said.

Premium written had remained flat during the four year period 2007, 2008, 2009 and 2010, showing growth of only 3% from 2007 to 2010. But for CY 2011, reported global gross written premium grew 6% for the membership from year end 2010 to year end 2011. Shareholder's equity declined under 1% from $90 B to $89 B. Kading noted, though, that if all 22 members had reported data that shareholder's equity would have remained at approximately $90 Billion. Twelve of the (re)insurers reported combined ratios of greater than 100%; and 10 of the 22 companies reported net losses for the year. ABIR members provide substantial amounts of property catastrophe reinsurance to global markets, their market share varies by jurisdiction but on a global basis it is assumed that 40% of the broker placed property catastrophe reinsurance is supplied by ABIR members and their affiliates.

ABIR members employed (year end 2010) nearly 32,000 people worldwide including 1,700 in Bermuda, 15,000 in the US and more than 8,000 in Europe.

Attached File: ABIR member individual and aggregate results; for more information contact [email protected]

(i) If all 22 members reported data, the year over year shareholder's equity number would have stayed the same at nearly $90 billion.

ABIR's International (Re) Insurers' Global Underwriting Report
Twelve Months Ended December 31, 2011

Prepared April 13, 2012
International (Re)Insurers' Global Underwriting Report
(IN THOUSANDS)
								Net
	Gross	Direct	Net	Net	Net	Losses &		Commission	Other			Net	Net	Realized
	Premiums	Premiums	Premiums	Premiums	Premiums	Loss Adj.		and	Underwriting			Underwriting	Investment	Gain (Loss)	Other	Other	Net	Total
	Written	Written	Written	Written	Earned	Expenses	Loss	Brokerage	Expense	Expense	Combined	Profit/(Loss)	Income	Securities	Revenue	Expense	Income	Equity
Reinsurer	Dec-11	Dec-11	Dec-11	Dec-10	Dec-11	Dec-11	Ratio	Dec-11	Dec-11	Ratio	Ratio	Dec-11	Dec-11	Dec-11	Dec-11	Dec-11	Dec-11	Dec-11
ACE Limited (1)	20,831,000	17,626,000	15,372,000	13,708,000	15,387,000	9,921,000	65.7%	2,447,000	2,052,000	28.9%	94.6%	967,000	2,242,000	(795,000)	0	323,000	1,585,000	24,516,000
Allied World Assurance Company Holdings, AG	1,939,521	1,369,017	1,533,766	1,392,455	1,456,992	959,156	65.8%	167,295	271,656	30.1%	95.9%	58,885	195,948	10,077	101,744	61,126	274,548	3,149,022
Alterra Capital Holdings Limited (2)	1,904,066	827,899	1,431,989	1,039,568	1,424,974	1,004,975	66.5%	261,102	190,519	31.7%	98.2%	(31,622)	234,846	(41,284)	5,396	111,555	65,282	2,809,235
Arch Capital Group Ltd. (3)	3,436,456	2,402,153	2,673,326	2,511,040	2,631,815	1,727,553	65.6%	459,508	400,100	32.7%	98.3%	44,654	338,198	110,646	(20,781)	45,705	436,358	4,628,486
Argo Group International Holdings Ltd. (4)	1,544,800	1,261,300	1,071,700	1,095,700	1,082,000	863,100	79.9%	426,700	5,900	40.0%	119.9%	(213,700)	125,800	49,200	1,400	25,600	(82,400)	1,479,000

Ariel Holdings Limited (5)	583,092	155,207	525,557	559,015	517,698	320,191	61.9%	100,352	75,669	36.3%	98.2%	42,799	44,446	(9,314)	21,313	19,678	57,739	1,261,478
Aspen Insurance Holdings Limited (6)	2,207,800	1,020,300	1,929,100	1,891,100	1,888,500	1,556,000	82.4%	347,000	235,500	33.2%	115.6%	(250,000)	225,600	(34,100)	(6,800)	77,700	(105,800)	3,172,000
Assured Guaranty Ltd. (7)	313,804	373,013	304,251	526,571	1,104,676	400,554	36.3%	27,551	181,971	19.0%	55.3%	494,600	391,017	(17,992)	276,845	110,008	775,620	4,718,436
Axis Capital Holdings Limited (8)	4,096,153	2,121,829	3,419,434	3,147,540	3,314,961	2,675,052	80.7%	587,469	382,062	31.6%	112.3%	(327,227)	362,430	121,439	2,396	95,105	46,305	5,444,080
Catlin Group Limited (9)	4,513,285	2,834,253	3,835,013	3,317,753	3,611,623	2,528,807	70.0%	758,874	420,122	32.6%	102.6%	(96,180)	147,410	100,290	4,286	85,235	81,897	3,297,741

Endurance Specialty Holdings Ltd. (10)	2,467,114	1,469,798	1,979,821	1,763,744	1,931,393	1,632,666	84.6%	282,911	264,152	28.3%	112.9%	(248,336)	147,037	28,151	7,422	51,014	(93,734)	2,611,165
Flagstone Reinsurance Holdings, S.A. (11)	789,697	0	558,432	668,729	571,478	676,535	118.4%	115,325	85,817	35.2%	153.6%	(306,199)	34,312	(18,276)	5,434	41,455	(326,133)	789,048
Hardy Underwriting Bermuda Limited (12)	416,091	180,209	293,739	323,992	295,312	227,852	77.2%	105,256	35,543	47.7%	124.9%	(73,338)	10,597	(3,187)	631	0	(53,619)	166,637
Hiscox Ltd. (13)	2,325,996	1,711,501	1,884,288	1,749,869	1,837,736	1,120,126	60.2%	433,016	278,936	39.3%	99.5%	5,658	80,784	(41,470)	345	17,597	34,142	1,934,084
Lancashire Holdings Limited (14)	632,312	484,895	565,088	649,818	574,508	182,314	31.7%	108,362	4,036	32.0%	63.7%	279,796	42,690	(1,997)	869	113,364	201,583	1,326,798

Montpelier Re Holdings Ltd. (15)	725,494	166,237	624,045	668,772	622,672	612,056	98.3%	105,430	98,602	32.8%	131.1%	(193,416)	68,661	26,181	3,334	20,606	(115,214)	1,549,349
PartnerRe Ltd. (16)	4,633,054	0	4,486,329	4,705,116	4,647,754	4,372,570	96.7%	938,361	336,355	28.7%	125.4%	(999,532)	629,148	66,692	7,915	155,542	(520,291)	6,467,542
Platinum Underwriters Holdings, Ltd. (17)	687,296	0	651,514	760,589	689,452	805,437	116.8%	133,177	47,564	26.2%	143.0%	(296,726)	125,863	(18,436)	1,118	39,016	(224,064)	1,690,859
RenaissanceRe Holdings Ltd. (18)	1,434,976	29,725	1,012,773	848,965	951,049	861,179	90.6%	97,376	169,666	28.0%	118.6%	(177,172)	118,000	70,116	(44,129)	59,365	(92,235)	3,608,533

Validus Holdings Ltd. (19)	2,124,691	510,200	1,835,450	1,761,084	1,802,143	1,244,401	69.1%	314,184	231,793	30.3%	99.4%	11,765	112,296	8,541	5,718	116,167	21,329	3,448,425
XL Group plc (20)	7,292,839	4,814,925	5,795,750	5,381,863	5,690,130	4,613,465	76.6%	826,411	869,292	30.9%	107.5%	(619,038)	1,137,769	(199,097)	144,787	879,474	(474,760)	10,769,410

Total Results	64,899,537	39,358,461	51,783,365	48,471,283	52,033,866	38,304,989	73.6%	9,042,660	6,637,255	30.1%	103.7%	(1,927,329)	6,814,852	(588,820)	519,243	2,448,312	1,491,553	88,837,328


(1) The results are on a consolidated U.S. GAAP basis and include the results of ACE Limited, ACE Bermuda, ACE Global Markets, ACE Tempest Life Re (including ACE Tempest Re Bermuda) and ACE Group Holdings, Inc. The underwriting ratios are for the consolidated business, excluding the life segment.
(2) Results include the major business units of Alterra Bermuda, Alterra Re USA, Alterra Europe, Alterra Specialty, and Alterra at Lloyd's. Loss ratio, expense ratio and combined ratio are calculated based on property and casualty business only, and exclude life and annuity business. Net underwriting profit includes life and annuity business.
(3) Arch Capital Group Ltd. is a Bermuda public limited liability company which provides insurance and reinsurance on a worldwide basis through its wholly-owned subsidiaries.
(4) Consolidated Group includes: The Argo Foundation PXRE Capital Statutory Trust II PXRE Capital Trust III PXRE Capital Statutory Trust V PXRE Capital Trust VI Argonaut Services GmbH Argo Re, Ltd. Argo Irish Holdings I, Ltd. Argo Irish Holdings II Argo Brasil Participacoes Ltd. PXRE Reinsurance (Barbados), Ltd. Mid Atlantic Risk Systems, Ltd. Argo Re DIFC, Ltd. Argo International Holdings, Ltd. Argo Underwriting Agency, Ltd. Argo Management Services, Ltd. Argo Management Holdings, Ltd. Argo Managing Agency, Ltd. Argo Direct, Ltd. Argo (No. 604), Ltd. Argo (No. 616), Ltd. Argo (No. 607), Ltd. Argo (No. 617), Ltd. Argo (No. 703), Ltd. Argo (No. 704), Ltd. Argo (Alpha), Ltd. Argo (Beta), Ltd. Argo (Chi), Ltd. ArgoGlobal Holdings (Malta) Ltd ArgoGlobal SE Argo Financial Holding, Ltd. (Ireland) Argo Solutions, SA Argo Financial Holding (Brazil) Limited Argo Seguras Brasil, SA Argo Group US, Inc. PXRE Capital Trust I Argonaut Group Statutory Trust Argonaut Group Statutory Trust III Argonaut Group Statutory Trust IV Argonaut Group Statutory Trust V Argonaut Group Statutory Trust VI Argonaut Group Statutory Trust VII Argonaut Group Statutory Trust VIII Argonaut Group Statutory Trust IX Argonaut Group Statutory Trust X Argonaut Management Services, Inc. Argus Reinsurance Intermediaries, Inc. Argonaut Fund to Secure the Future Alteris, Inc Trident Insurance Services, LLC Alteris Insurance Services, Inc. Canterbury Claims Services, Inc. Colony Management Services, Inc. Colony Agency Services, Inc. Argonaut Claims Management, LLC Argonaut Claims Services, Ltd. Colony Insurance Company Colony Specialty Insurance Company Colony National Insurance Company Argonaut Insurance Company Argonaut-Midwest Insurance Company Argonaut-Southwest Insurance Company Argonaut Great Central Insurance Company Insight Insurance Services, Inc. Select Markets Insurance Company Argonaut Limited Risk Insurance Company Central Insurance Management, Inc. Grocers Insurance Agency, Inc. AGI Properties, Inc. Rockwood Casualty Insurance Company Somerset Casualty Insurance Company Mid-State Insurance Underwriters, Inc. Coal Operators Indemnity Company ARIS Title Insurance Corporation.
(5) The results of Ariel Holdings Ltd. are on a consolidated U.S. GAAP basis and include the results of Ariel Reinsurance Company Ltd., and Atrium Underwriting Group Limited. As Ariel has adopted FAS 159 we have included $12,468 of unrealized gains in realized gains and losses above.
(6) The business of Aspen Insurance Holdings Limited is conducted through its wholly-owned subsidiaries: Aspen Insurance Limited (Bermuda Operating Company), Acorn Limited (Bermuda Company), Aspen Specialty Insurance Company (US Operating Company), Aspen American Insurance Company (US Operating Company), Aspen (UK) Holdings Limited (UK Holding Company), Aspen Managing Agency Limited (Managing Agent to Lloyd's Syndicate 4711) and Aspen Underwriting Limited (Lloyd's Corporate Member).
(7) Reported results are for Assured Guaranty Ltd, a Bermuda based holding company,and include the results of it's principal operating subsidiaries, Assured Guaranty Corp, Assured Guaranty Municipal Corp and Assured Guaranty Re Ltd. and their respective subsidiaries.
(8) We are reporting on a consolidated basis, including the following subsidiaries: Axis Specialty Ltd. (Bermuda), Axis Reinsurance Co (NY), Axis Insurance Company (Illinois), Axis Surplus Insurance Co (Illinois), Axis Specialty Insurance Co (Connecticut), Axis Reinsurance Europe Ltd. (Dublin), Axis Specialty Europe Ltd. (Dublin).
(9) Catlin Group Limited includes 4 reporting segments aligned to underwriting hubs, which correspond to where the business is written: London/UK, Bermuda, US and International, which comprises the Group's Asia-Pacific, Europe and Canada underwriting hubs. The Consolidated Results of Operations for the Group are presented on a US GAAP basis. The expense ratio does not include financing and amortization charges, profit related bonuses, share option scheme costs and certain other Group corporate costs.
(10) These results are on a consolidated U.S. GAAP basis and include the accounts of: Endurance Specialty Insurance Ltd.; Endurance Worldwide Insurance Limited; Endurance Reinsurance Corporation of America, Endurance American Insurance Company; Endurance American Specialty Insurance Company; Endurance Risk Solutions Assurance Co.; American Agri-Business Insurance Company; and ARMtech Insurance Services, Inc.
(11) These results are on a consolidated U.S. GAAP basis and include the accounts of Flagstone Reinsurance Holdings, S.A. and its subsidiaries. The results of our Lloyd's and Island Heritage former reporting segments are reported as discontinued operation and as such are included in above in Other Expense.
(12) This filing is on a group basis representing the following individual companies; The Company owns 100% of the ordinary share capital in the following subsidiaries. Hardy Underwriting Group Plc* UK holding company Hardy Re Limited* Bermudian reinsurance company Hardy Bermuda Limited* Bermudian managing general agent Hardy Underwriting Limited UK corporate member of Lloyd's Hardy Names Limited UK corporate member of Lloyd's Hardy IC Limited UK corporate member of Lloyd's Commenced for the 2012 underwriting year Hardy (Underwriting Agencies) Limited UK managing agent Hardy Insurance Services Limited UK service company Hardy Underwriting Asia Pte Ltd Singaporean service company Hardy Guernsey Limited* Guernsey insurance company * held directly The Company also owns 50% of the ordinary share capital in HAIM, a joint venture with Arig. HAIM, which was established in 2009 and is based in Bahrain, focuses on construction, property and onshore energy. Primarily HAIM writes business from the Middle East and North African regions but also considers business from other parts of Asia and Africa. Both Hardy and Arig have equal representation on the board of directors of HAIM. The income statement reflects foreign exchange gains or losses, including gains or losses on the retranslation of net non-monetary Items in the balance sheet, where the accounting convention is to recognise underwriting profit or losses at the average rate of exchange for the period, the balance sheet is converted at closing rates, the retranslation of the result for the period recognised at average rates to closing rates is recognised as a foreign exchange loss. The expense ratio as reported on the ABIR Return will differ to that reported in the Group accounts filed in Bermuda as the group accounts alocate known expenses at Segmental level only.
(13) Results presented in accordance with IFRS and include the Hiscox Ltd. owned portion of Syndicate 33, Hiscox Insurance Company (Bermuda) Limited, Hiscox Insurance Company (Guernsey) Limited, Hiscox Insurance Company Limited and Hiscox USA. Realized Loss On Securities includes $49,559 of net fair value losses on financial investments at fair value. Ratios include foreign exchange gains, excluding foreign exchange impact expense ratio is 39.1% and combined ratio is 99.3%. Converted from GBP at average rate relevant for the period. (2011 : 1.605 ; 2010 : 1.546). Capital and surplus translated at closing USD rate of 1.54.
(14) The Group's consolidated financial information is prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS"). The amount shown as a realized gain/(loss) on securities contains ($10,634) which represents the net change in unrealized gains/losses on investments including tax expense of ($111) for the year ended 31 December 2011. The information above includes Lancashire Holdings Limited and its five wholly owned subsidiaries: Lancashire Insurance Company Limited, Lancashire Insurance Holdings (UK) Limited ("LIHL"), Lancashire Insurance Marketing Services Limited, Lancashire Insurance Services Limited and Lancashire Marketing Services (Middle East) Limited ("LMEL"). LIHL is a holding company for a wholly owned operating subsidiary, Lancashire Insurance Company (UK) Limited. During 2011 the Group wound up LMEL.
(15) Net unrealized losses total $8,376 for the year ended December 31, 2011.
(16) Results for PartnerRe Ltd. (PartnerRe) are on a U.S. GAAP basis and include the results of its principal wholly-owned subsidiaries, including Partner Reinsurance Company Ltd., Partner Reinsurance Europe Limited and Partner Reinsurance Company of the U.S. Realized gains (losses) on securities for the year ended December 31, 2011 of $66,692 includes changes in unrealized losses on investments of $6,844 and realized gains on investments of $73,537.
(17) The results are presented on a consolidated U.S. GAAP basis. Platinum Underwriters Holdings, Ltd. and its subsidiaries operate primarily through two licensed reinsurance subsidiaries: Platinum Underwriters Bermuda, Ltd. and Platinum Underwriters Reinsurance, Inc.
(18) On November 18, 2010, RenaissanceRe Holdings Ltd. entered into a definitive stock purchase agreement (the "Stock Purchase Agreement") with QBE Holdings, Inc. ("QBE") to sell substantially all of its U.S.-based insurance operations, including its U.S. property and casualty business underwritten through managing general agents, its crop insurance business underwritten through Agro National Inc., its commercial property insurance operations and its claims operations. RenaissanceRe Holdings Ltd. has three reportable segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures, (2) Lloyd's, which includes reinsurance and insurance business written through RenaissanceRe Syndicate 1458, and (3) Insurance, which includes the operations of the Company's former Insurance segment that were not sold pursuant to the Stock Purchase Agreement with QBE. Included in Realized Gain (Loss) on Securities of $70,116 is realized gains on fixed maturity investments of $48,699; unrealized gains on fixed maturity investments of $19,404; unrealized gains on equity investments of $2,565; and net other-than-temporary impairments of $552.
(19)These numbers are on a consolidated basis and include the following companies: Validus Reinsurance, Ltd. and Talbot Holdings, Ltd. Realized gains (losses) on securities for the year ended December 31, 2011 of $8,541 include net realized gains of $28,532 and net unrealized losses of $(19,991).
(20) XL Group plc, through it's operating subsidiaries, (collectively the "Company"), is a leading provider of insurance and reinsurance coverages to industrial, commercial, and professional firms, insurance companies and other enterprises on a worldwide basis. The Company operates in three business segments; Insurance, Reinsurance, and Life operations. These consolidated financial results include the accounts of the Company and all of its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for year end financial information. Other underwriting expenses exclude corporate operating expenses.Ratios are based on net premiums earned from property and casualty operations. The underwriting expense ratio excludes foreign exchange gains and losses.