Monday, January 25, 2010

A quiet 2009 helps property & casualty insurance recover

Insurance Although 2009 was relatively mild in terms of natural catastrophes -- hurricane-free in the United States and without a Haiti-style calamity elsewhere -- global terror and climate change have become ever more prominent on Munich Re's radar. Still, the economic forecast has improved for the property/casualty sector from theQuiet darkest days of last year's financial crisis, executives said at Munich Re's Catastrophe Year in Review webinar.
Robert Hartwig, president of the Insurance Information Institute, said the sector returned to profitability last year, with estimated net revenue after taxes of $16.1 billion and estimated return on equity of 4.5%. In 2008, the industry only mustered $2.3 billion net after taxes and ROE of 0.3%, Hartwig said.

Investment income seems to be growing as well, he said. Through the first three quarters of last year, the P/C sector's investment gains stood at $26.2 billion. By comparison, insurers' investment income for all of 2008 was $31.4 billion.

…Carl Hedde, head of Risk Accumulation at Munich Re America, noted that insured losses in the United States in 2009 totaled $11.1 billion, far less than the 1999-to-2008 average annual loss of $24.5 billion. These losses mostly stemmed from winter storms, severe thunderstorms, spring flooding in the nation's heartland and California wildfires, Hedde said.

…Ernst Rauch, head of Munich Re's Corporate Climate Center, said although 850 natural catastrophes occurred worldwide in 2009, "none of these events met the requirement in our database as a so-called great natural catastrophe," he said. However, the 10-year average worldwide for these events is only 770 annually, he noted.

More than 40% of last year's catastrophes, and 82% of total insured losses, resulted from storms, Rauch said, and 60% of these events occurred in North America. Another 28% happened in Europe. Insured losses were $22 billion worldwide in 2009, while the 10-year average has been $36 billion a year, he said.

A map of the 2009 Atlantic hurricane season. Created by Cyclonebiskit using Wikipedia:WikiProject Tropical cyclones/Tracks. The background image is from NASA. Tracking data from the National Hurricane Center[1] or the Joint Typhoon Warning Center.

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