Reinsurers' earnings rebounded during the first half of 2012, a function of relatively low catastrophe losses so far this year and higher rates in the aftermath of the colossal natural-catastrophe losses that pounded the insurance industry in 2011, according to John Welch, president of XL Re America Inc.
But other factors, including potential hurricane and drought-related losses during the remainder of 2012—as well as reduced insurer demand—threaten to take the shine off the year's results to date.
“Over the last six months, the global reinsurance market's earnings have been very strong,” Welch notes. “With limited catastrophe losses, reinsurers have been able to realize some very positive earnings development year over year,” and have also boosted rates, particularly for property exposures.
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