Global re/insurers see average premium increase of 11% in Q1: Gallagher Re


According to a report by Gallagher Re.

Underwriting results were strong, with re/insurers posting a combined ratio of 94%, compared to 96% in the first quarter of 2021, according to the report titled “Global financial results of (re)insurers for the first quarter of 2022”. (A combined ratio below 100% indicates an underwriting profit).

Almost all companies posted a combined ratio of less than 100%, thanks to favorable rate increases, favorable net development in prior accident year reserves and lower natural catastrophe losses compared to the first. quarter of last year (when winter storm Uri hit Texas), Gallagher Re reported.

“Rising economic inflation and the expectation that this trend will continue have created more uncertainty about the ultimate losses that will be incurred to settle claims,” ​​the report continued. “These factors, along with the impact of the low interest rate environment on net investment income, drove rates higher. Companies are getting rate increases in many cases for the fourth year in a row. »

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Gallagher Re noted that some management teams are carefully monitoring price trends and claims inflation and will adjust premium growth as necessary to support profitability.

Other key findings of the report include:

  • While average premium growth was 11%, the largest increases came from global reinsurers (+20%) and North American and Bermudian insurers and reinsurers (+13%).
  • One of the biggest challenges over the next three quarters is the continued increase in social inflation due to its impact on claims costs and loss ratio trends, particularly in the higher lines of business. exposed to civil liability.
  • Although not a significant driver of overall first quarter results, some re/insurers have built up reserves for claims exposure
    regarding the war in Ukraine.
  • Falling stock markets contributed to a decline in average return on equity to 9% (Q1 2021: 14%).
  • European solvency improved to 227% (Q1 21: 220%), supported by higher risk-free interest rates and retained earnings. “This level of sector solvency is at the upper end of the guidance levels, which provides a solid foundation for capital returns,” the report said.
  • Despite strong operating results, reported shareholders’ equity for the entire re/insurer group recorded significant declines, driven by rising interest rates leading to a decline in the value of insurance portfolios. bonds and equity holdings.
  • Consensus earnings per share (EPS) estimates for 2023 rose 1.1% after the first quarter results.
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Gallagher Re follows the world’s largest re/insurers with significant commercial lines or reinsurance operations.

Source: Gallagher Re

Insurer Trends Reinsurance Rate Trends AJ Gallagher

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