Gallagher Re has reported that underwriting results were “exceptionally strong” for global re/insurers across the board in H1 2022 with an average combined ratio of 94.1%, and all but three re/insurers posting a sub-100% combined ratio.
The firm said that this level of profitability is broadly in line with the 93.8% from H1 2021, supported by the above noted 12% growth in H1 premium, lower natural catastrophe loss activity (partly due to a lighter Q1 compared to the Texas Freeze affected 2021), higher prior year reserve development, and a lower expense ratio.
These positive factors, it said, were offset by a higher attritional loss ratio, due in part to a rise in personal lines loss trends.
Gallagher Re said that although not a significant driver of overall H1 results, some (re)insurers established reserves for claims exposure relating to the war in Ukraine. Significant uncertainty remains around ultimate loss estimates and we will continue to monitor these exposures as claims emergence becomes clearer.
It wrote: “The (re)insurers which we track reported average premium growth of 12% in H1, with the strongest increases coming from the Global Reinsurers (+18%) and North American and Bermudan (re)insurers (+14%). Intact’s 49% increase in premium at H1 reflected its acquisition of RSA’s Canadian and UK operations and organic growth driven by commercial lines.”
It added: “Continued pricing gains for commercial lines business remained the key driver of premium growth in Q2. Apart from Swiss Re which was down 4%, all companies we track showed a year-on-year increase in premium. Additionally, Q2 premium increases tended to be higher than those in Q1. During Q2, 9 of the 25 companies in our data set reported a greater than 20% premium increase year on year, versus just 5 of 25 at Q1.”
Gallagher Re reported that a number of management teams had said they expected premium increases to continue to outpace loss cost trends going into next year.
It added: “While that is positive, and a trend that has continued for some time, the next section of this report will note that the average attritional loss ratio this quarter ticked up by 1 percentage point versus the prior year.”
