july 17, 2006 international insurance society frank nutter reinsurance association of america a u.s....
TRANSCRIPT
July 17, 2006
International Insurance Society
Frank Nutter
Reinsurance Association of America
A U.S. Perspective on the Global Reinsurance Market
Source: Swiss Re
Premiums ceded by primary insurers (US$’bn)
Gross Premium ceded by region of ceding insurer
Global Reinsurance Premium by Country of Group Domicile in 2004
Total Global Net Reinsurance Premiums : USD 166,899.2 (Mil.$)
Rest of World9%
Bermuda9%
U.K.8%
France3%
Ireland2%
U.S.21%
Germany27%
Japan7%
Switzerland14%
Source: S&P’s Global Reinsurance Highlights 2005 Edition
$62.0B$62.0B$62.0B$62.0B
Cross Border Premiums
US to Offshore$62.0B
To affiliates $38.8B
To non-affiliates $23.2B
$14.3B$14.3B$14.3B$14.3B
Offshore to US$14.3B
US to Offshore$62.0B
Cross Border Premiums
Cross Border Premiums
Top 25 P&C Reinsurance
Groups(Based on 2004
premiums)
1. MUNICH RE GERMANY2. SWISS RE SWITZERLAND3. BERKSHIRE HATHAWAY RE U.S.4. HANNOVER RE GERMANY5. GE INSURANCE SOLUTIONS U.S.6. LLOYD’S U.K.7. ALLIANZ RE GERMANY8. EVEREST RE BERMUDA9. XL RE BERMUDA10. PARTNER RE BERMUDA11. TRANSATLANTIC HOLDINGS INC. U.S.12. CONVERIUM SWITZERLAND13. TOKIO MARINE NICHIDO FIRE INS. JAPAN14. SCOR FRANCE15. ODYSSEY RE U.S.16. SOMPO JAPAN INS. INC. JAPAN17. MITSUI SUMITOMO INS. CO. LTD. JAPAN18. CAISSE CENTRALE DE REASSURANCE FRANCE19. KOREAN RE KOREA20. PLATINUM UNDERWRITERS HOLDINGS LTD. BERMUDA21. ACE TEMPEST RE BERMUDA22. AIOI INSURANCE CO. LTD. JAPAN23. RENAISSANCERE HOLDINGS LTD. BERMUDA24. ALEA GROUP HOLDINGS(BERMUDA) BERMUDA25. TOA RE CO. LTD. JAPAN
Top 10 Global Reinsurance Groups in 2004
Total Global Net Reinsurance Premiums : USD 166,899.2 (Mil.$)
Rest of Market36%
Partner Re2%
Everest Re3%
Swiss Re15%
Berkshire Hathaway Re
6%GE Ins Solutions
5%Hannover Re
6%
Lloyd's5%
XL Re2%
Allianz Re3%
Munich17%
Source: S&P’s Global Reinsurance Highlights 2005 Edition
Number of U.S. Professional Reinsurers Reporting to the RAA
Announced Insurer Capital Raising*
$1,500
$43
$869$688
$300$448
$759
$300
$100
$612
$126$285
$620
$131$212
$500 $550$406 $474
$2,800
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$ M
illi
ons
As of June 8, 20 insurers have raised $12.1 billion in new capital; 12 Start-ups
raised $7.6 billion more and SPRV’s/Sidecars raised $3.6 billion for a total of $23.3B.
Existing companies
will continue to
find it relatively
easy to raise cash.
($ Millions, as of June 8, 2006)
*Existing (re)insurers. Announced amounts may differ from sums actually raised.Sources: Morgan Stanley, Lehman Brothers, Company Reports; Insurance Information Institute.
Announced Capital Raising by Insurance Start-Ups
$448
$1,300
$1,000
$530
$1,000
$500
$1,000
$500
$300
$150$220
$1,000
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$ M
illio
ns
As of June 8, new Bermuda Start-ups have raised $7.6B.
($ Millions, as of June 8, 2006)
Announced Capital Raising by Special Purpose Reinsurance Vehicles/Sidecars
$900
$550 $525
$370$315 $300
$250$200
$145$91
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$ M
illio
ns
As of June 8, SPRV’s/Sidecars
have raised $3.6B.
($ Millions, as of June 8, 2006)
Berkshire Hathaway
Transatlantic Holdings, Inc.
Odyssey Re
100% of US Reinsurers by market share have
EU domestic companies
Top 25 Worldwide P&C Reinsurer GoupsCross Ownership Common
84% of EU Reinsurersby market share have
US domestic companies
Munich Re
Hannover Re
Allianz Re
SCOR
Lloyds*
AXA*
*No Sub
100% of US Reinsurers by market share have
EU domestic companies
Top 25 Worldwide P&C Reinsurer GoupsCross Ownership Common
Top 25 Worldwide P&C Reinsurer GoupsCross Ownership Common
89% of non-US[EU/Asia/Bermuda/Swiss]
Reinsurers by market sharehave US domestic companies*
84% of EU Reinsurersby market share have
US domestic companies
Munich ReSwiss ReHannover ReAllianz ReEverest ReXL RePartner ReConveriumTokio Marine Nichido Fire Ins. SCORSompo Japan Ins. Inc.Mitsui Sumitomo Ins. Platinum Underwriters Holdings Ltd.Ace Tempest ReAioi Insurance Co. Ltd.Alea Group Holdings(Bermuda) Toa Re Co. Ltd.
*Based on 2004 data
100% of US Reinsurers by market share have
EU domestic companies
Reporting reinsurers’ total capital available
Reason for P/C Insolvencies(218 Insolvencies, 1993-2002)
Unidentified17%
Impaired Affiliate3%
Overstated Assets2%
Change in Business3%
CAT Losses3%
Reinsurer Failure0%
Rapid Growth10%
Discounted Ops8%
Alleged Fraud3%
Deficient Loss Reserves
51%
Source: A.M. Best, Insurance Information Institute
Reserve deficiencies account for
more than half of all p/c insurers
insolvencies
Reinsurance Regulation in the U.S. and Mutual Recognition
• The current regulatory system has served U.S. buyers well
• New initiatives deserve considerationEU Re DirectiveSovency II
• The Goal: sound solvency regulation and healthy competition
• Mutual Recognition Road Map International accounting standardsStandards for regulationReconciliation within the U.S. system