I put Berkshire in the title because in addition to being the world's third largest reinsurer they recently upped their stake in #1 ranked* Munich Re to 7.99%.
Berkshire Hathaway also owns 3% of Swiss Re and has 3Billion Swiss francs worth of some yummy 12% notes, convertible at 25CHF i.e. 120Mil. shares, current outstanding 354Mil.; last trade 52.35 CHF.
*Munich Re and Swiss Re have swapped the #1 ranking the last few years. We'll have the final 2009 tally by June.
When I started my brief stint in the reinsurance business in late 2007, the words "excess capital" were on everyone's lips. Reinsurers had record capital on hand and were pushing dividends and share buybacks because they couldn't find ways to make it productive. Two years later, we're getting close to those record levels, according to a new report from Aon Benfield (AON), despite everything that's happened in between – the financial crisis, Hurricanes Gustav and Ike and the earthquake in Chile, for example.
If you look at the financials, it's almost like nothing has changed, and let's hope the lessons learned in between aren't obscured by the full pockets that reinsurers can now boast.Global reinsurance capital has reached $396 billion, according to Aon Benfield. The Aon Benfield Aggregate (ABA), a measure of 30 reinsurers from around the world, posted aggregate shareholders equity of $210 billion for last year, up 28% from full-year 2008 and even ahead of 2007 levels. The 30 companies in the ABA are estimated to account for more than 50% of reinsurance capital worldwide.
Gross written premium for the ABA climbed a modest 1% to $133 billion for 2009, and its combined ratio, fell to 90.9% thanks to a lower aggregate loss ratio. This helped push pre-tax profits, for the ABA, from $9 billion to $27 billion....MORE