Friday, July 1, 2011

Insurance: "Willis Re Sees Reinsurers Reacting as $48 Billion Losses Take Their Toll" (BRK.B)

Since we're on the weather beat.
From Insurance Journal:

The Willis Re’s 1st View Renewals Report for June/July 2011, entitled – “Mixed Messages”- estimates that “a string of natural catastrophes in the first quarter of 2011 has cost reinsurers in the region of 10 percent of their total shareholders’ funds at the end of December 2010.

This “exceptional” run of natural catastrophes has cost reinsurers approximately $48 billion and primary insurers around $86 billion, according to Willis Re, the reinsurance arm of global insurance broker Willis Group Holdings.

However, the report notes that “share buy backs have been scaled down and $1.2 billion of new capital has entered the industry through side cars and fresh equity as some reinsurers start to position themselves for possible reinsurance rate hikes,” which somewhat offsets the reinsurance losses.
There have also been some changes in the widely-used natural catastrophe models in the U.S., used by reinsurers, Willis Re noted, and there will be “new releases of European catastrophe models generating similar issues. The report highlights this as yet another challenge facing buyers as they seek to understand the impact of model changes on their capital management and performance strategies.”...MORE