December 16, 2008

International reinsurance giant reported a loss after another into a life-saving straw prices?

Following the world's second-largest re-insurance company Swiss Re in recent days notice of their 6-year-quarter loss for the first time, on November 5, the world's fourth largest, Germany's second-largest reinsurance companies Hannover Re also announced third-quarter financial results, due to financial The negative impact of the crisis, Hannover Re has also been reported from the 2005 quarter for the first time since the loss.



In addition to the inevitable reinsurers to natural disasters in the great loss in the third quarter of 2008, as an important institutional investors, insurance companies also highlight the investment losses, and higher compensation expenses are intertwined, so that a number of reinsurance Giants do not have to hand over a satisfactory answer.



International reinsurance brokerage firm Ben-fu Group (Benfield) has recently published study that is about to enter in the 2009 renewal period, due to reduced assets to reduce the reinsurers underwriting capacity, lack of financing prompted the re-insurers of the retrocession Surge in demand for a variety of factors, the total price of reinsurance will bid farewell to the weak trend, ushered in the international reinsurance market prices.



Investment losses caused by



Hannover Re Quarterly Bulletin revealed that its third-quarter loss of 395,000,000 euros, while its net profit for the same period last year 284,000,000 euros. At the same time, Hannover Re net income to -1.43 billion euros in the same period last year of 577,000,000 euros substantially reduced its losses as high as 445,000,000 euros.



Quarterly Bulletin shows that, as of September 30, 2008, Hannover Re's rights and interests of the shareholders amounted to 2,600,000,000 euros, representing a December 31, 2007 of 3,300,000,000 euros declined. The report said that "as a key factor in the impact of financial crisis, its 2007 dividend to meet expenses 277,000,000 euros, the book value of 21.67 euros per share."



Hannover Reinsurance in the financial pointed out that in 2008 the international financial markets as well as the further deterioration of the above-average catastrophe losses in the third quarter led to the deterioration of the operating result, despite taking a more conservative investment strategy, but still had to Hannover Re in In the third quarter of the Hong Kong equity holdings once again a major write-down. The company this year, a total of 9 months before the write-down shares 355,300,000 euros of assets, write-down type of fixed-income assets 077,300,000 euros, net investment income fell 56.7 percent to 3.7 billion euros.



"Our core business development in line with expectations, unfortunately, as a major institutional investors, we can not escape the storm's impact on capital markets." Hannover Re CEO Wilhelm Zeller said.



Hannover Re has set this year's rate of return on equity target of 15%, but that goal will be reduced. At the same time, the Quarterly Bulletin also noted that Hannover Re in the fourth quarter of this year is expected to break even, for a full year, it is difficult to avoid a loss for the first time in history.



"We have reduced our profitability is no longer meet the requirements of the business and improve our product portfolio for the benefit of other needs, including the German market, the Central and Eastern European markets, as well as the world's agricultural insurance market, and so on, these areas Demand is growing. "Wilhelm Zeller pointed out.



Prior to November 4, the world's second largest re-insurance company Swiss Re also announced its Quarterly Bulletin for the third quarter, the company emerged in the first quarter of 6-year loss.



Rui performance again reported that its 2008 third quarter net loss of 304 million Swiss francs in the third quarter of a loss of 0.93 Swiss francs per share, before the 9 months profit of 2.66 Swiss francs per share.



In the third quarter of 2008, another Swiss property and accident insurance operating income in 2008 from the second quarter fell to 1.8 billion Swiss francs 710,000,000 Swiss francs, the combined ratio was 99.8% (excluding the call-back after the discounted value of the combined Rate of 97.6 percent), while the first nine months combined ratio was 96.4% (excluding the call-back after the discounted value of the combined ratio to 94.4 percent).



Zurich asset management company that Swiss Re's financial results are disappointing, it will be Swiss Re's rating as "reduction", adding that the company's capital today, the write-down is only "the tip of the iceberg - the status quo of doom and gloom, the prospects for Lightning Cross. "



Reinsurance prices will rise



Reinsurance giant's loss is likely to bring further premium rate increases, the increase in payments from the major reinsurance companies and assets to reduce the lead to the decline in underwriting capacity, and the cash flow shortage in Europe and the United States but can no longer as Insurers into the source of funds.



Ben-fu said the report, with the January 2009 reinsurance renewal period is approaching, the international reinsurance market, the price will rise, sub-loan crisis caused by the reduction of capital brought about by the hurricane and Ike is a huge pay rise in the price of two Big reason.



Ben-fu's studies indicate that the non-life insurance companies are often more conservative investment, the bulk of its assets in high-quality investment-grade fixed income securities, however, its net assets will not be from the growing downside risks in the market value of escape .



"Natural disasters and the loss of investment losses seem to be an isolated incident, but its impact may be greater than simply the total loss and the loss of confidence in the combined will seriously affect people's behavior, and the impact on the insurance companies and Re's earnings. "Ben-fu Research Angie Coad said.



Hannover Re's reinsurers a German E + R Rück has previously said that as a major disaster and the loss of some business in the area of the additional capital requirements, would like to see "substantial price increases."



A few days ago in Germany, Baden - Baden at a meeting, a number of reinsurance companies and insurance companies to meet, arrange with the terms and conditions of the contract renewal. Munich Re board member of the media Lude Sen said that reinsurance will reach double-digit price increases. "We are back to the 'strong market'." Lude Sen said.



Munich Re's reinsurance business director in charge of Torsten Jeworrek said, "We are now faced by the United States market with the 911 is very similar to the incident, but the risk is increased safety factor is reduced, and then hope that the Mu continued to contract in 2009 when the price of 20 %. "



"911" after the terrorist attacks, even though the market was still full of strong insurer's underwriting capacity and adequate, but that after the catastrophe, there have been substantial rate increases. This means that the "market rate or too high, resulting in underwriting excess capacity; or less than the rate that some customers have to start all over again, they will try out the risk of arrangements." Torsten Jeworrek said.



Torsten Jeworrek said Mu again just prior to the planned auto insurance business super-compensation increases, but improve the management of the recently re-make the decision, it will lose all of the super-price business. "We are in the price, we will pay attention to the past records of individual countries and regions will be in this business based on pricing."



With the global financial crisis intensifies, more than expected in recent days the international reinsurers, who provide reinsurance to insurance companies, may need to raise prices to cover the risk.



A large-scale domestic insurance companies and property reinsurance Department said that from a single payment on the loss, although the domestic reinsurance market and the international reinsurance market is not a high degree of correlation, but a shortage of funds brought about by the major reinsurers decline in underwriting capacity, are bound to affect the To reinsurance and retrocession to the international market price.

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