Insurance and reinsurance companies around the world are starting to announce their results for the year ended 31 December 2017.

In the past couple of days, three international reinsurers have released statements regarding the year end renewals while this morning (8 February) the first Lloyd’s listed insurer, Beazley, announced its results.

Munich Re said that just under half of its €18 billion book of property and casualty reinsurance came up for renewal on 1 January. It was able to secure “substantial rate increases” on loss impacted business, the first positive rate change in four years. Overall premium growth on renewal contracts was 19%, although the average improvement in rates was just 0.8%. The group stated that it has clearly improved the profitability of the overall portfolio. Although it will not release its final results for the year to 31 December 2017 until 15 March, it released preliminary guidance for the year including an expected property-casualty reinsurance combined ratio for the year of 114.1% (which compares to 95.7% in 2016).

Munich Re’s presentation can be found here.

Hannover Re (which is now the parent company of Argenta Group Limited) which has a gross premium income of €18 billion (placing it the third largest reinsurer in the world) also reported rate increases on its book of renewals and a larger increase in the written premium income arising out of the renewal portfolio. The group considers that it had a successful renewal season, premium volumes in traditional property and casualty classes (excluding facultative reinsurance, insurance linked security business and structured reinsurance) were up by 12.7%. It was able to secure renewal terms on loss free contracts in non-impacted regions that were at worst at least on a par with expiring terms, while achieving rate increases on some loss-free business and up to double digit increases on loss affected business. Overall, there was much more attractive business presented than had been the case twelve months previously. Hannover Re will publish results for the year ended 31 December 2017 on 13 March 2018.

Hannover Re’s presentation can be found here

SCOR released a report on the €3.0 billion of reinsurance renewals that fell due on 1 January. It increased premium volumes by 3.7% at constant rates of exchange and recorded a 3.0% improvement in risk adjusted rates on its portfolio. It said that reinsurance pricing improved across almost all lines of business and geographic markets although loss impacted business (principally catastrophe programmes in the USA and motor reinsurance in the UK) achieved the largest increases. Scor releases its year end results on 22 February.

Scor’s reinsurance renewal presentation can be found here

Although all of the three European reinsurers own operations at Lloyd’s, Beazley is the first of the listed insurers based at Lloyd’s to report its results this year. With the acquisition of Novae by Axis in the final quarter of 2017, this field is reduced to just Beazley, Hiscox and Lancashire (which trades at Lloyd’s as Cathedral). Despite the record breaking levels of insured catastrophe loss, Beazley has made an underwriting profit in 2017, with a combined ratio of 99%, up from 89% in 2016. Headline results are as follows:

 

 

 

Year ended 31 December 2017

Year ended 31 December 2016

Change

Gross Written Premium $m

$2,343.8

$2,195.6

+7%

Net Earned Premium $m

$1,869.4

$1,768.2

+6%

Profit before tax $m

$168.0

$293.2

$168.0

Loss Ratio

57.5%

48.4%

9.2 points worse

Expense Ratio

41.4%

40.7%

0.7 points worse

Combined Ratio

99.0%

89.1%

9.9 points worse

 The underwriting result benefited from a release from reserves of $204m, up from $187m in 2016, with the Specialty Lines division being the largest contributor, accounting for around 60% of the overall release. The management holds reserves at a margin in excess of actuarial best estimates, with a target range for this margin to be 5% to 10%. At the year end, the margin has fallen to the bottom end of the range, at just 5%, although the group states that this is in part owing to the catastrophe activity, where there is a greater degree of certainty over the eventual payout than for the longer tail specialty lines account.

The investment income also improved in 2017, with a return on assets of 2.9% up from 2% in 2016.

The rating environment was difficult in 2017, with an average reduction in rates of 1% (compounding a 2% reduction in 2016). A summary of rate movements across the five operating units of the business can be found here. This does not include movements so far in 2018, although Beazley states that it has already experienced increases across the property and treaty reinsurance sectors and anticipates further improvements over the year.

The full results can be found here and the analysts’ presentation pack here.

Although Beazley has reported group results, it has not yet released results for it managed third party Syndicates 623 and 6107. We anticipate these by the end of this month.

Lloyd’s timetable requires that all managing agents file their year-end returns by 15 February. Managing agents will begin to release their results to us at this time. The majority of Lloyd’s managing agents are part of a wider insurance and reinsurance group, and these managing agents typically cannot release their results ahead of group announcements. We expect to be advised of results during February and into the first couple of weeks of March. Lloyd’s will announce the aggregate results for the market on 21 March, and will release a full listing of the results as at 36 months of all third party syndicates’ 2015 accounts and an update of the forecasts for third party syndicates’ 2016 account as at 24 months. Although we expect that a number of managing agents will release early indicative forecasts of the 2017 account at 12 months, there is no requirement for them to do so and the first formal forecasts for the 2017 account are made at the end of the fifth quarter and will be published on 16 May.

Other notable results announcements are Lancashire on 15 February and Hiscox on 26 February.