Transcript Document

Current International
Trends in Reinsurance
African Reinsurance Brokers
AIO 16th Reinsurance Forum
October 2010, Casablanca
Omar NGADI
Current International Trends in
Reinsurance
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Start of 2009 :
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Excessive capital
overcapacity
crawling interest rates
low financial returns
Current International Trends in
Reinsurance
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Trends: Year 2009
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Financial Crisis had not the same impact on
Reinsurance than Finance
Excessive equity generated USD 14 billion
underwriting overcapacity
Important gains due to low number of events and high
profits
Current International Trends in
Reinsurance
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Trends: Year 2009
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Fall of combined ratios
Combined ratios ( non Life)
2008
2009
Top 25 Reinsurers
100%
Between 70% and 80%
Munich Re
97,9%
65,7%
Current International Trends in
Reinsurance
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Trends: Year 2009
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Decrease in insurance services demand except
for Asia & latin America
Lower insurance rates due to high competition
between insurance companies & high retention
Table 1: Premium volume by region in 2009
premium volume (in
millions of USD)
change (in %)
inflation-adjusted
share of
world market
(in %)
premiums
as a % of
GDP
premiums
per capita (in
USD)
Total Business
2009
2008
2009
2008
2009
2009
2009
America
1 349 495
1 450 407
-6,1
-2,5
33,19
6,91
1 470,20
North America
1 238 586
1 344 105
-7,1
-3,2
30,46
7,94
3 634,50
Latin America
110 910
106 302
5,7
8,1
2,73
2,82
192,2
Europe
1 610 620
1 703 713
1,8
-9,9
39,61
7,58
1 861,50
Western Europe
1 525 953
1 605 623
2,6
-10,7
37,53
8,46
2 922,40
Central and Eastern Europe
84 667
98 090
-10,9
9,9
2,08
2,75
262,7
Asia
989 451
934 577
2,8
6,4
24,33
6,8
243,1
Japan and newly industrialized
Asian economies
699 012
676 979
-0,4
3,5
17,19
10,33
3 307,60
South and East Asia
261 887
229 068
12,1
16,6
6,44
3,43
74
Middle East and Central Asia
28 552
28 530
3,4
2,7
0,7
1,54
92
Africa
49 287
52 829
-11,1
1,9
1,21
3,26
48,8
Oceania
67 241
78 543
-9,6
8,8
1,65
6,24
1 862,90
World
4 066 095
4 220 070
-1,1
-3,6
100
6,98
595,1
Industrialized countries
3 532 716
3 706 806
-1,8
-5,3
86,88
8,61
3 404,90
Emerging markets
533 379
513 265
3,5
11
13,12
2,89
91,5
Sigma n°2/2010
Current International Trends in
Reinsurance
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Trends: Year 2010
High frequency and impact of natural disasters/losses
estimated at USD 22 billion for 1st half 2010
 Aggravation of combined ratios
 Persistence of Low interest rates with no signs of a
pick-up
 Low financial returns
 Perfect conditions for a market recovery ?
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Table 2: Major Losses in 2010
Month
Country
Nature
Loss estimate
Jan
Haiti
Earthquake
$ 150 million
Feb
Chile
Earthquake
$ 15 billion
Feb
europe
Xynthia/ storms
$ 3.4 billion
Feb
Australia
Storms
$ 1.3 billion
Apr
Gulf of Mexico
Deepwater/OIL
RIG
1.6 billion
Jul/Aug
Russia
Drought, Fire
-
Jul/Aug
Pakistan
Floods
$ billion
Table 3: 1st Half 2010 Performance
Top 25 Reinsurers
Shareholders funds
USD 235 billion
Invested funds
USD 837 billion
Profits before tax (1st half 2010)
USD 15 billion
*ie 65% increase compared to 1st half 2009
Current International Trends in
Reinsurance
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Downward trends
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Very low interest rates
Overall decrease of rates for all classes of business
except those threatened by disasters (drilling platform
/ Chile).
12 to 15% reduction for property risks
Rates maintained for retrocession business
Rates maintained for non drilling liability business
Current International Trends in
Reinsurance
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Downward trends
Overall decrease of ROL to 6%
Reinsurers feel that trend would go on till 2011
 Soft market
A new Katrina could reverse the trend
Global Reinsurance Forum (GRF) agreed to
stabilize the rates
Come back of alternative risk transfers ?
Current International Trends in
Reinsurance
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The African Reinsurance Market
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A market largely dependant on international
reinsurers & brokers
Currently benefiting from the soft market
Need of concentration rather than fragmentation
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As seen in the international market (table 4)
Table 4:Top 5 Global Reinsurance Groups
Ranked By Net Reinsurance Premiums Written
Net Reinsurance
Premium
written
(Mil. $)
Ranking
Company
Country
1
Munich Re
2
Pretax Operating
Income
(Mil. $)
Total Adjusted
Shareholders'
Funds (Mil. $)
2009
2008
2009
2008
2009
2008
Germany
33,704.6
29,076.8
6,064.4
6,304.4
30,372.1
28,235.4
Swiss Re
Switzerland
22,896.7
24,296.0
1,280.6
8,152.6
26,151.7
20,266.1
3
Hanover Re
Germany
13,639.0
10,196.3
1,217.9
428.3
8,113.5
6,636.6
4
Berkshire Hathaway
Re
US
12,362.0
12,123.0
N.A.
N.A.
64,146.0
50,795.0
5
Lloyd's
UK
9,733.5
6,701.0
1,983.0
1,062.2
28,929.8
20,523.9
Current International Trends in
Reinsurance
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The African Reinsurance Market
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Solvency II, what benefit to Africa ?
The issue of ratings : SCR Case
African reinsurance premium USD 2.5 Billion
Share of African Reinsurers : 40%
African reinsurance brokerage : USD 80-100 million
African Brokers Share: 3% ?!
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Urgent need for a Mega African reinsurance broker
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Thank you.