Tougher times ahead

International

Global reinsurers will continue to make an underwriting profit in 2008, but the margins will be significantly less than they were in 2007 when companies from a still-favourable though softening rate environment reported modest loss reserve releases and manageable catastrophe losses. Fitch, in a special report on the sector, said reinsurers now face heightened competitive pressures. Fitch, which is projecting an aggregate combined ratio in the 94.0% to 98.0% range, pointed to continuing declines in overall premium rates, a reduction in favourable prior-year reserve development, and a range of catastrophe losses based on historical results. The Fitch report, which surveys the results of 32 publicly traded global reinsurers, found these companies, which had aggregate shareholders’ equity of US$312.9bn and US$280.7bn at year-end 2007 and 2006, respectively, generated US$46.0bn in net income in 2007.