German re/insurer Deutsche Rückversicherung AG (Deutsche Rück) reported a net profit of €56.0 million, after tax, in 2018 despite turning an underwriting loss, partly driven by claims from weather events such as Storm Friederike/David.
The improved result, which was well above the net profit of €3 million recorded in 2018, was primarily due to increased investment income of €86.5 million, up from €29.3 million in the previous year.
Losses in the technical account, which totalled €9.4 million, were also less severe than in 2017, when Deutsche Rück reported a €20.0 million underwriting loss.
The loss was partly due to a significant rise in Deutsche Rück’s gross claims burden, which increased from €656.1 million to €752.2 million, with a corresponding rise in the loss ratio from 56.0% to 65.9%.
The re/insurer attributed the higher claims burden to a large number of major fire claims in 2018, as well as a considerable increase in windstorm and builds insurance due to the impact of Storm Friederike.
Net premiums earned rose by €23.0 million, or 3.3%, to €728.8 million, although gross premiums written decreased by €93.2 million, or 7.8%, to €1.1 billion.
This decline was due to the restructuring of residual credit business at the parent company level, Deutsche Rück said, which it had in the past transferred to a group of public insurers.
Premiums for the company’s retrocessions fell by 23.9% to €374.8 million in 2018, again due to the restructuring of the residual credit business.
Deutsche Rück’s combined ratio deteriorated slightly from 95.2% in 2017 to 97.2% in 2018.
“Deutsche Rückversicherung AG successfully continued its rock-solid performance in 2018,” Frank Schaar, Chief Executive Officer (CEO) at Deutsche Rück.
“Within long-standing business partnerships, we improved our clients’ risk positions, generated added value for our shareholders and simultaneously strengthened our assets,” he continued.
“In 2018 we once again strengthened our reserves and continued our long-standing, conservative reserving practice. The technical account therefore closed with a loss after the change to equalisation reserves.
“However, our retrocession scheme, which is geared towards property business, enabled us to limit our risk positions effectively.”
