Why would General Re (which reported $2.1 billion in net premiums for 2004) and American Re (which reported $1.8 billion for the same period) report negative net written premium totals on their annual statement filed with state regulators? Did they pay out more premiums than they took in? Essentially, yes.

The totals are not errors. Instead, in both cases the negatives are the result of family transactions ceding losses from prior years--and premiums--to affiliates. The companies explained the loss-portfolio transfers in the Management's Discussion and Analysis sections of their annual statements, each noting they had the permission of domestic insurance regulators to do the deals.

According to Gen Re's statement, there were actually two deals with affiliates National Indemnity and Columbia Insurance effective Jan. 1, 2005--a loss-portfolio transfer (providing a 50 percent reinsurance cover on existing net losses as of Dec. 31, 2004), and a quota-share contract (providing a 50 percent reinsurance cover on business transacted on or after Jan. 1, 2005).

Under the bigger deal--the loss-portfolio transfer--Gen Re ceded $4.7 billion in outstanding losses and nearly $5.0 billion of earned premium.

In the American Re deal, a loss-portfolio transfer effective July 1, 2005 saw the Princeton, N.J.-based reinsurer cede all carried loss and loss-expense reserves for accident years 2001 and prior off to Germany, to parent Munich Re. American recorded ceded premiums and losses of nearly $6 billion.

NU's 2005 reinsurer rankings were not the only industry statistics impacted by the loss-portfolio transfers. A close reading of property-casualty 2005 results released by the Jersey City-based Insurance Services Office in April reveals that the industry's overall net written premium was distorted by the sizable American Re transaction sending premiums outside the United States.

ISO noted that while industrywide premiums put into the record books show a meager growth figure of 0.4 percent for the year, if the industry results are adjusted for the impact of the American Re transfer, the growth figure is bumped up to 1.8 percent.

First-quarter 2006 underwriting results for the top-10 U.S. reinsurers accompany this article, eliminating some of the distortion of the loss-portfolio transfers and providing more timely information.

NU's U.S. reinsurer rankings, which are based on statements of reinsurers filed with U.S. regulators, do not include many Bermuda companies that assume business from U.S. insurers. Some Bermuda companies with U.S. operations that file with U.S. regulators are included, however--most notably Axis Reinsurance Company, which leaped more than 10 spots on the 2005 full-year ranking.

(Axis' financial statements disclose a Jan. 1, 2005 agreement in which Axis Re accepts 70 percent of affiliate Axis Surplus' net underwriting results. The agreement may explain, in part, the magnitude of Axis' premium jump relative to U.S. competitors.)

NU's listings rank individual reinsurance companies rather than groups. Companies included meet the following criteria:

o Premiums assumed from nonaffiliates are over 55 percent of gross premiums, or "Re" is part of the company or group name.

o Premiums do not relate exclusively to mortgage, credit or other guaranty lines.

Two companies--National Indemnity and Berkley Insurance Company--did not meet the first test in 2005. They continue to have a place in our rankings, since both companies refer to the entities as "reinsurers" in public filings.