Net income for 13 major U.S. reinsurers rose to $6 billion for the first nine months of 2006, improving from a breakeven position in the comparable period last year as their industry reaped the benefit of a light catastrophe year.
This positive result was prompted by a 30-point fall in the loss ratio, according to the latest Benfield quarterly report on the United States.
Premium levels stabilized at $26.4 billion, halting the falling trend in place since 2003. Retentions rose as companies took advantage of an attractive rating environment.
The report noted underwriting results for the Benfield U.S. Quarterly group in the first nine months were positive owing to the lack of major catastrophe losses and minimal adverse development on prior year losses. The weighted average combined ratio declined 27.7 points, from 123.8 to 96.1.
The contribution from investments was robust, with a total income of $7.5 billion in the first nine months. Realized gains were not enough to offset the $1.8 billion realized loss reported by Swiss Re America, and aggregate losses totaled $796 million, Benfield reported.
Leon Janeke, a member of Benfield's Industry Analysis and Research Team, said that balance sheet strength generated a healthy contribution to the group's aggregate bottom line.
"The third-quarter results suggest that there is scope for further improvement in the combined ratio," he said, noting that the last three months of the year have shown similar light catastrophe losses.
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