French reinsurer Caisse Centrale de Réassurance (CCR) saw its 2016 net income decline to €141 million (US$154mn) and its combined ratio weaken to 89.9%, as flooding in May-June saw its natural catastrophe France claims expenses increase by over €400 million (US$436mn).
“The 2016 results, marked by a high level of claims, demonstrate the relevance and robustness of the CCR model. They also report on the efforts made to improve the operational efficiency of the company,” said CCR Chairman, Pierre Blayau.
Parts of France were hit with intense and damaging floods in May-June of last year, and CCR notes that its natural catastrophe France claims expenses grew by over €400 million as a result, and its claims/premiums ratio increased from 61% to 74% in response to the “strong cat loss ratio.”
The decline in net income for the year from €216 million (US$235mn) in 2015 to the €141 million (US$154mn) recorded in 2016, says CCR, is a result of the “amortisation effect of provisions for equalisation,” which it realised a €165 million (US$180mn) benefit, and the “sound administrative and financial management of CCR.”
“Despite the reduction in equalization provisions, CCR could cover a Cat Nat loss of around € 5.7 billion at market level without recourse to state support,” says CCR.
Gross revenues in 2016 grew by 2.2% to €1.315 billion (US$1.43bn), which the firm says was driven by the consolidation of its reinsurance market portfolio. Reinsurance segment revenues remained stable at €872 million (US$950mn), while market reinsurance grew by 5.8% to €443 million (US$482mn), which was largely driven by life reinsurance business.
Operating expenses declined by 2% for the company in 2016 and despite the fall in interest rates, financial income remained at a stable €174 million (US$190mn).
CCR’s unrealised capital gains in the year grew slightly to €1.09 billion (US$1.19bn), taking total assets under management to almost €10 billion (US$10.89bn).