As we peer into 1999, one clear fact emerges from our review of the finances of the reinsurance industry: this is a great buyer’s market with abundant capacity and declining prices.-
Buyer
Target Acquisition
General Electric Capital Corp.
Kemper Re
Berkshire Hathaway
General Re Corp.
Swiss Re
Life Re Corp.
Employers Reinsurance Corp.
IndustrialRisk Insurers
Exel Ltd.
Mid Ocean Ltd.
ACE Ltd.
Cat Ltd.
Partner Re Ltd
Winterthur Re
Gerling
Constitution Re
As we peer into 1999, one clear fact emerges from our review of the finances of the reinsurance industry: this is a great buyer’s market with abundant capacity and declining prices.-
Forecasting the U.S. insurance industry in recent years has been a rear view mirror exercise. The rate of growth in the industry has been in the same 2% to 3% range and profitability indicators have shown little change from year to year.
Barring a major shock, the outlook for both the insurance and reinsurance business in the U.S. in 1999 is again a mirror image of the prior year. Top line growth will be minimal. Profitability is expected to show only a mild deterioration from the results of 1998, reflecting continued price competition in practically all lines of insurance.
Areas of critical concern for 1999 include: an increased level of price competition in private passenger auto insurance, cost increases in workers compensation, and vulnerabilities to declines in values in the equity and bond markets. In the reinsurance industry, prices are expected to be soft, absent a major catastrophe.
The primary industry
As the chart below shows, premium growth in 1998 is almost negligible. For 1999, premiums are expected to increase by only 2%. The factors contributing to the low rate of increase in premiums include a relatively slow rate of inflation in the underlying economy, and stiffer price competition.
While price competition has been intense in commercial lines throughout the past decade, 1998 saw the emergence of considerable price pressure in personal lines as well, specifically in auto insurance. A clear indication of this pressure was provided by the consumer price index for auto insurance, which shows an increase of only 1% in 1998 — in fact, it showed a decrease in December of last year.
The industry’s underwriting loss in the U.S. is expected to swell to $13.5 billion for 1998, more than double the relatively low loss for 1997 of $6.1 billion. The major factor causing the increase is a higher level of catastrophe losses. Catastrophe losses for 1998 are estimated at $10.1 billion, up from $2.6 billion in 1997.
On the investment front, there is concern that investment income may decline on an overall basis in 1998, reflecting reduced interest rates and slower growth in assets. Investment income was actually down 9.6 percent in the first half of 1998, but this was partly explained by special technical factors, involving non-recurring inter-company transfers at two major insurers.
Looking to 1999, several areas are worth monitoring closely. The bloom is likely to start fading on profitability in personal auto insurance. On the claims side, we are seeing signs of rising severity for bodily injury, a trend that is likely to accelerate, as cost pressures in the health care sector spread to auto insurance. At the same time, prices are declining, as noted above. However, price competition in this market has tended to be more disciplined than in commercial lines. In fact, we will probably see some firming of prices in a number of states in 1999 in response to cost increases.
The key unknown in this market is how aggressive the newer direct selling entrants are likely to be. This in turn depends on consumer shopping patterns. In general, auto insurance consumers in the U.S. have been reluctant shoppers. This imposes heavy acquisition costs on direct sellers. It is an open question whether newer more refined forms of direct marketing and the use of the Internet can reduce these costs.
There are major concerns in the workers compensation area. This line greatly improved in the mid-1990s, but is now deteriorating. Following the reforms in the line, costs went down. Within a short period of time, however, these cost reductions were followed by competitive price cuts. Now, in many states claim costs are rising and the profitability of the line is expected to continue declining. We are not yet close to a crisis stage, but, if current trends continue, market dislocations could emerge in about two years.
On the investment front, the reduced yields in bond markets will make it difficult for companies to maintain profit levels. There will be pressure to bolster reported profits in three major areas:
Sell assets to generate realized capital gains, which are included in reported income;
Write down redundant reserves, thus swelling income;
Increase prices.
We may see companies try all three. However, given companies’ concerns on maintaining market share, they are not likely to have much success on getting rate increases.
Reinsurance Industry
For the reinsurance marketplace, 1999 holds the promise of continued profitability, clouded by concerns about the U.S. economy as it becomes impacted by the turmoil in world financial markets. To appreciate fully the outlook for the industry in these turbulent times, let’s first examine how the sector fared in the late 1990s.
The overall market for reinsurance in the U.S. has been flat in the past few years. Net premiums for professional reinsurance companies in Guy Carpenter’s composite database totaled $17.9 billion in 1997, about equal to the totals of $17.8 billion and $17.6 billion in 1995 and 1996 respectively.
For 1998, premiums are estimated to have fallen by about 1% from 1997. The stagnant market reflects a number of factors, including intense competition and slow growth in the underlying primary market, particularly in commercial lines. The price of catastrophe reinsurance in particular has fallen dramatically. Guy Carpenter’s data on renewals for major U.S. catastrophe programs show declines in a range of 11% to 17% in rates on line for 1998. Renewals for 1999 are also showing decreases, but at a reduced rate.
Despite the slow growth, the profitability of the industry has been steady. The combined ratio shows its strongest rate in ten years, mainly reflecting a low level of catastrophes.
Insured catastrophe losses in the U.S. totaled $2.6 billion in 1997, the lowest level since 1988. Only one hurricane hit the U.S. mainland, Hurricane Danny, and cost only $60 million in insured losses. As predicted, El Nino reduced the amount of Atlantic storm activity. With the ending of El Nino in 1998, Atlantic hurricane activity intensified. Losses from catastrophes, arising from hurricanes and other storms, increased to $10.1 billion in 1998. However, these losses did not have a major impact on reinsurers as they were below the retention levels of most programs. The combined ratio for reinsurers for 1998 is estimated at 104%, about equal to its level of 1997.
The rate of return for the reinsurance sector increased to 11% in 1997. Returns were slightly lower than in the primary sector, and below the profit rate of the Fortune 500 at 14%. The rate of return for 1998 is expected to be close to the 1997 level.
Looking toward 1999, a major concern is a possible recession in the U.S. Recessions tend to have only minor impacts on the demand for insurance, both on the primary and reinsurance sides. There can be, however, significant impacts on the investment side. Given the current state of excess capital in the industry, with the premium to surplus ratio at the phenomenally low level of 0.7x, it would take practically a 1929 market collapse to seriously impair reinsurers’ capital. On the other hand, the reduced potential for capital gains and weakening investment income, as a result of declining interest rates, could lead to an overall decline in profitability in 1999.
Following a relative hiatus in consolidation activity in the U.S. reinsurance market in 1997, the summer of 1998 saw a renewal of “blockbuster” deals, with the takeover of General Re by Berkshire Hathaway and of Kemper Re by General Electric Capital Corp.
As motivations for these and other mergers, participants list factors like “synergy” and economies of scale, while outside observers point to other factors, like a lack of “organic growth” in the industry and the need to achieve scale economies. Some analysts have stressed purely financial reasons, including the notion that the Berkshire Hathaway purchase of General Re was a clever way for Berkshire to weight its portfolio towards bonds, and away from stocks, by picking up General Re’s large bond portfolio.
As a r
esult of the many mergers and withdrawals over the years, the number of “professional reinsurers,” as opposed to reinsurance departments, has thinned.
Currently only 40 companies are listed by RAA as professional reinsurers, down from 149 in 1982 and 74 in 1989. The reinsurers reporting to the RAA write about 75% of the reinsurance coverage provided by U.S. reinsurance companies and their affiliates. The market, however, following the many mergers, is still highly competitive, and prices remain relatively soft. There is no sense yet that the market has reached a point where any player has significant market power.
And U.S. companies are not the only players competing for business ceded by primary companies. Alien reinsurers write about 40% of U.S. business. The alien market consists of more than 2,500 reinsurers in more than 95 jurisdictions around the globe. Bermuda reinsurers, most of whom did not exist a decade ago, assume the greatest share of business originating in the U.S., with London second.
Capacity in the conventional reinsurance market has been supplemented by an inflow of funds from capital markets. The past year and a half has seen significant growth in the securitization of catastrophe risk, with 18 significant issues brought to market, up from three in 1996. As discussed by Harvard professor Kenneth Froot in his paper “The Evolving Market for Catastrophic Event Risk,” prepared by Marsh & McLennan Securities Corp. and sponsored by Guy Carpenter, capital markets are likely to play a significant role in financing catastrophic risk in the years ahead. It can also be expected that capital markets will be utilized in financing non-catastrophic risks, in such areas as run-offs and environmental risks.
Major Acquisitions in U.S. and Bermuda
Reinsurance Markets in 1998:
Buyer
Target Acquisition
General Electric Capital Corp.
Kemper Re
Berkshire Hathaway
General Re Corp.
Swiss Re
Life Re Corp.
Employers Reinsurance Corp.
IndustrialRisk Insurers
Exel Ltd.
Mid Ocean Ltd.
ACE Ltd.
Cat Ltd.
Partner Re Ltd
Winterthur Re
Gerling
Constitution Re
As we peer into 1999, one clear fact emerges from our review of the finances of the reinsurance industry: this is a great buyer’s market with abundant capacity and declining prices.-
Forecasting the U.S. insurance industry in recent years has been a rear view mirror exercise. The rate of growth in the industry has been in the same 2% to 3% range and profitability indicators have shown little change from year to year.
Barring a major shock, the outlook for both the insurance and reinsurance business in the U.S. in 1999 is again a mirror image of the prior year. Top line growth will be minimal. Profitability is expected to show only a mild deterioration from the results of 1998, reflecting continued price competition in practically all lines of insurance.
Areas of critical concern for 1999 include: an increased level of price competition in private passenger auto insurance, cost increases in workers compensation, and vulnerabilities to declines in values in the equity and bond markets. In the reinsurance industry, prices are expected to be soft, absent a major catastrophe.
The primary industry
As the chart below shows, premium growth in 1998 is almost negligible. For 1999, premiums are expected to increase by only 2%. The factors contributing to the low rate of increase in premiums include a relatively slow rate of inflation in the underlying economy, and stiffer price competition.
While price competition has been intense in commercial lines throughout the past decade, 1998 saw the emergence of considerable price pressure in personal lines as well, specifically in auto insurance. A clear indication of this pressure was provided by the consumer price index for auto insurance, which shows an increase of only 1% in 1998 — in fact, it showed a decrease in December of last year.
The industry’s underwriting loss in the U.S. is expected to swell to $13.5 billion for 1998, more than double the relatively low loss for 1997 of $6.1 billion. The major factor causing the increase is a higher level of catastrophe losses. Catastrophe losses for 1998 are estimated at $10.1 billion, up from $2.6 billion in 1997.
On the investment front, there is concern that investment income may decline on an overall basis in 1998, reflecting reduced interest rates and slower growth in assets. Investment income was actually down 9.6 percent in the first half of 1998, but this was partly explained by special technical factors, involving non-recurring inter-company transfers at two major insurers.
Looking to 1999, several areas are worth monitoring closely. The bloom is likely to start fading on profitability in personal auto insurance. On the claims side, we are seeing signs of rising severity for bodily injury, a trend that is likely to accelerate, as cost pressures in the health care sector spread to auto insurance. At the same time, prices are declining, as noted above. However, price competition in this market has tended to be more disciplined than in commercial lines. In fact, we will probably see some firming of prices in a number of states in 1999 in response to cost increases.
The key unknown in this market is how aggressive the newer direct selling entrants are likely to be. This in turn depends on consumer shopping patterns. In general, auto insurance consumers in the U.S. have been reluctant shoppers. This imposes heavy acquisition costs on direct sellers. It is an open question whether newer more refined forms of direct marketing and the use of the Internet can reduce these costs.
There are major concerns in the workers compensation area. This line greatly improved in the mid-1990s, but is now deteriorating. Following the reforms in the line, costs went down. Within a short period of time, however, these cost reductions were followed by competitive price cuts. Now, in many states claim costs are rising and the profitability of the line is expected to continue declining. We are not yet close to a crisis stage, but, if current trends continue, market dislocations could emerge in about two years.
On the investment front, the reduced yields in bond markets will make it difficult for companies to maintain profit levels. There will be pressure to bolster reported profits in three major areas:
Sell assets to generate realized capital gains, which are included in reported income;
Write down redundant reserves, thus swelling income;
Increase prices.
We may see companies try all three. However, given companies’ concerns on maintaining market share, they are not likely to have much success on getting rate increases.
Reinsurance Industry
For the reinsurance marketplace, 1999 holds the promise of continued profitability, clouded by concerns about the U.S. economy as it becomes impacted by the turmoil in world financial markets. To appreciate fully the outlook for the industry in these turbulent times, let’s first examine how the sector fared in the late 1990s.
The overall market for reinsurance in the U.S. has been flat in the past few years. Net premiums for professional reinsurance companies in Guy Carpenter’s composite database totaled $17.9 billion in 1997, about equal to the totals of $17.8 billion and $17.6 billion in 1995 and 1996 respectively.
For 1998, premiums are estimated to have fallen by about 1% from 1997. The stagnant market reflects a number of factors, including intense competition and slow growth in the underlying primary market, particularly in commercial lines. The price of catastrophe reinsurance in particular has fallen dramatically. Guy Carpenter’s data on renewals for major U.S. catastrophe programs show declines in a range of 11% to 17% in rates on line for 1998. Renewals for 1999 are also showing decreases, but at a reduced rate.
Despite the slow growth, the profitability of the industry has been steady. The combined ratio shows its strongest rate in ten years, mainly reflecting a low level of catastrophes.
Insured catastrophe losses in the U.S. totaled $2.6 billion in 1997, the lowest level since 1988. Only one hurricane hit the U.S. mainland, Hurricane Danny, and cost only $60 million in insured losses. As predicted, El Nino reduced the amount of Atlantic storm activity. With the ending of El Nino in 1998, Atlantic hurricane activity intensified. Losses from catastrophes, arising from hurricanes and other storms, increased to $10.1 billion in 1998. However, these losses did not have a major impact on reinsurers as they were below the retention levels of most programs. The combined ratio for reinsurers for 1998 is estimated at 104%, about equal to its level of 1997.
The rate of return for the reinsurance sector increased to 11% in 1997. Returns were slightly lower than in the primary sector, and below the profit rate of the Fortune 500 at 14%. The rate of return for 1998 is expected to be close to the 1997 level.
Looking toward 1999, a major concern is a possible recession in the U.S. Recessions tend to have only minor impacts on the demand for insurance, both on the primary and reinsurance sides. There can be, however, significant impacts on the investment side. Given the current state of excess capital in the industry, with the premium to surplus ratio at the phenomenally low level of 0.7x, it would take practically a 1929 market collapse to seriously impair reinsurers’ capital. On the other hand, the reduced potential for capital gains and weakening investment income, as a result of declining interest rates, could lead to an overall decline in profitability in 1999.
Following a relative hiatus in consolidation activity in the U.S. reinsurance market in 1997, the summer of 1998 saw a renewal of “blockbuster” deals, with the takeover of General Re by Berkshire Hathaway and of Kemper Re by General Electric Capital Corp.
As motivations for these and other mergers, participants list factors like “synergy” and economies of scale, while outside observers point to other factors, like a lack of “organic growth” in the industry and the need to achieve scale economies. Some analysts have stressed purely financial reasons, including the notion that the Berkshire Hathaway purchase of General Re was a clever way for Berkshire to weight its portfolio towards bonds, and away from stocks, by picking up General Re’s large bond portfolio.
As a r
esult of the many mergers and withdrawals over the years, the number of “professional reinsurers,” as opposed to reinsurance departments, has thinned.
Currently only 40 companies are listed by RAA as professional reinsurers, down from 149 in 1982 and 74 in 1989. The reinsurers reporting to the RAA write about 75% of the reinsurance coverage provided by U.S. reinsurance companies and their affiliates. The market, however, following the many mergers, is still highly competitive, and prices remain relatively soft. There is no sense yet that the market has reached a point where any player has significant market power.
And U.S. companies are not the only players competing for business ceded by primary companies. Alien reinsurers write about 40% of U.S. business. The alien market consists of more than 2,500 reinsurers in more than 95 jurisdictions around the globe. Bermuda reinsurers, most of whom did not exist a decade ago, assume the greatest share of business originating in the U.S., with London second.
Capacity in the conventional reinsurance market has been supplemented by an inflow of funds from capital markets. The past year and a half has seen significant growth in the securitization of catastrophe risk, with 18 significant issues brought to market, up from three in 1996. As discussed by Harvard professor Kenneth Froot in his paper “The Evolving Market for Catastrophic Event Risk,” prepared by Marsh & McLennan Securities Corp. and sponsored by Guy Carpenter, capital markets are likely to play a significant role in financing catastrophic risk in the years ahead. It can also be expected that capital markets will be utilized in financing non-catastrophic risks, in such areas as run-offs and environmental risks.
Major Acquisitions in U.S. and Bermuda
Reinsurance Markets in 1998:
Buyer
Target Acquisition
General Electric Capital Corp.
Kemper Re
Berkshire Hathaway
General Re Corp.
Swiss Re
Life Re Corp.
Employers Reinsurance Corp.
IndustrialRisk Insurers
Exel Ltd.
Mid Ocean Ltd.
ACE Ltd.
Cat Ltd.
Partner Re Ltd
Winterthur Re
Gerling
Constitution Re
As we peer into 1999, one clear fact emerges from our review of the finances of the reinsurance industry: this is a great buyer’s market with abundant capacity and declining prices.-
Forecasting the U.S. insurance industry in recent years has been a rear view mirror exercise. The rate of growth in the industry has been in the same 2% to 3% range and profitability indicators have shown little change from year to year.
Barring a major shock, the outlook for both the insurance and reinsurance business in the U.S. in 1999 is again a mirror image of the prior year. Top line growth will be minimal. Profitability is expected to show only a mild deterioration from the results of 1998, reflecting continued price competition in practically all lines of insurance.
Areas of critical concern for 1999 include: an increased level of price competition in private passenger auto insurance, cost increases in workers compensation, and vulnerabilities to declines in values in the equity and bond markets. In the reinsurance industry, prices are expected to be soft, absent a major catastrophe.
The primary industry
As the chart below shows, premium growth in 1998 is almost negligible. For 1999, premiums are expected to increase by only 2%. The factors contributing to the low rate of increase in premiums include a relatively slow rate of inflation in the underlying economy, and stiffer price competition.
While price competition has been intense in commercial lines throughout the past decade, 1998 saw the emergence of considerable price pressure in personal lines as well, specifically in auto insurance. A clear indication of this pressure was provided by the consumer price index for auto insurance, which shows an increase of only 1% in 1998 — in fact, it showed a decrease in December of last year.
The industry’s underwriting loss in the U.S. is expected to swell to $13.5 billion for 1998, more than double the relatively low loss for 1997 of $6.1 billion. The major factor causing the increase is a higher level of catastrophe losses. Catastrophe losses for 1998 are estimated at $10.1 billion, up from $2.6 billion in 1997.
On the investment front, there is concern that investment income may decline on an overall basis in 1998, reflecting reduced interest rates and slower growth in assets. Investment income was actually down 9.6 percent in the first half of 1998, but this was partly explained by special technical factors, involving non-recurring inter-company transfers at two major insurers.
Looking to 1999, several areas are worth monitoring closely. The bloom is likely to start fading on profitability in personal auto insurance. On the claims side, we are seeing signs of rising severity for bodily injury, a trend that is likely to accelerate, as cost pressures in the health care sector spread to auto insurance. At the same time, prices are declining, as noted above. However, price competition in this market has tended to be more disciplined than in commercial lines. In fact, we will probably see some firming of prices in a number of states in 1999 in response to cost increases.
The key unknown in this market is how aggressive the newer direct selling entrants are likely to be. This in turn depends on consumer shopping patterns. In general, auto insurance consumers in the U.S. have been reluctant shoppers. This imposes heavy acquisition costs on direct sellers. It is an open question whether newer more refined forms of direct marketing and the use of the Internet can reduce these costs.
There are major concerns in the workers compensation area. This line greatly improved in the mid-1990s, but is now deteriorating. Following the reforms in the line, costs went down. Within a short period of time, however, these cost reductions were followed by competitive price cuts. Now, in many states claim costs are rising and the profitability of the line is expected to continue declining. We are not yet close to a crisis stage, but, if current trends continue, market dislocations could emerge in about two years.
On the investment front, the reduced yields in bond markets will make it difficult for companies to maintain profit levels. There will be pressure to bolster reported profits in three major areas:
Sell assets to generate realized capital gains, which are included in reported income;
Write down redundant reserves, thus swelling income;
Increase prices.
We may see companies try all three. However, given companies’ concerns on maintaining market share, they are not likely to have much success on getting rate increases.
Reinsurance Industry
For the reinsurance marketplace, 1999 holds the promise of continued profitability, clouded by concerns about the U.S. economy as it becomes impacted by the turmoil in world financial markets. To appreciate fully the outlook for the industry in these turbulent times, let’s first examine how the sector fared in the late 1990s.
The overall market for reinsurance in the U.S. has been flat in the past few years. Net premiums for professional reinsurance companies in Guy Carpenter’s composite database totaled $17.9 billion in 1997, about equal to the totals of $17.8 billion and $17.6 billion in 1995 and 1996 respectively.
For 1998, premiums are estimated to have fallen by about 1% from 1997. The stagnant market reflects a number of factors, including intense competition and slow growth in the underlying primary market, particularly in commercial lines. The price of catastrophe reinsurance in particular has fallen dramatically. Guy Carpenter’s data on renewals for major U.S. catastrophe programs show declines in a range of 11% to 17% in rates on line for 1998. Renewals for 1999 are also showing decreases, but at a reduced rate.
Despite the slow growth, the profitability of the industry has been steady. The combined ratio shows its strongest rate in ten years, mainly reflecting a low level of catastrophes.
Insured catastrophe losses in the U.S. totaled $2.6 billion in 1997, the lowest level since 1988. Only one hurricane hit the U.S. mainland, Hurricane Danny, and cost only $60 million in insured losses. As predicted, El Nino reduced the amount of Atlantic storm activity. With the ending of El Nino in 1998, Atlantic hurricane activity intensified. Losses from catastrophes, arising from hurricanes and other storms, increased to $10.1 billion in 1998. However, these losses did not have a major impact on reinsurers as they were below the retention levels of most programs. The combined ratio for reinsurers for 1998 is estimated at 104%, about equal to its level of 1997.
The rate of return for the reinsurance sector increased to 11% in 1997. Returns were slightly lower than in the primary sector, and below the profit rate of the Fortune 500 at 14%. The rate of return for 1998 is expected to be close to the 1997 level.
Looking toward 1999, a major concern is a possible recession in the U.S. Recessions tend to have only minor impacts on the demand for insurance, both on the primary and reinsurance sides. There can be, however, significant impacts on the investment side. Given the current state of excess capital in the industry, with the premium to surplus ratio at the phenomenally low level of 0.7x, it would take practically a 1929 market collapse to seriously impair reinsurers’ capital. On the other hand, the reduced potential for capital gains and weakening investment income, as a result of declining interest rates, could lead to an overall decline in profitability in 1999.
Following a relative hiatus in consolidation activity in the U.S. reinsurance market in 1997, the summer of 1998 saw a renewal of “blockbuster” deals, with the takeover of General Re by Berkshire Hathaway and of Kemper Re by General Electric Capital Corp.
As motivations for these and other mergers, participants list factors like “synergy” and economies of scale, while outside observers point to other factors, like a lack of “organic growth” in the industry and the need to achieve scale economies. Some analysts have stressed purely financial reasons, including the notion that the Berkshire Hathaway purchase of General Re was a clever way for Berkshire to weight its portfolio towards bonds, and away from stocks, by picking up General Re’s large bond portfolio.
As a r
esult of the many mergers and withdrawals over the years, the number of “professional reinsurers,” as opposed to reinsurance departments, has thinned.
Currently only 40 companies are listed by RAA as professional reinsurers, down from 149 in 1982 and 74 in 1989. The reinsurers reporting to the RAA write about 75% of the reinsurance coverage provided by U.S. reinsurance companies and their affiliates. The market, however, following the many mergers, is still highly competitive, and prices remain relatively soft. There is no sense yet that the market has reached a point where any player has significant market power.
And U.S. companies are not the only players competing for business ceded by primary companies. Alien reinsurers write about 40% of U.S. business. The alien market consists of more than 2,500 reinsurers in more than 95 jurisdictions around the globe. Bermuda reinsurers, most of whom did not exist a decade ago, assume the greatest share of business originating in the U.S., with London second.
Capacity in the conventional reinsurance market has been supplemented by an inflow of funds from capital markets. The past year and a half has seen significant growth in the securitization of catastrophe risk, with 18 significant issues brought to market, up from three in 1996. As discussed by Harvard professor Kenneth Froot in his paper “The Evolving Market for Catastrophic Event Risk,” prepared by Marsh & McLennan Securities Corp. and sponsored by Guy Carpenter, capital markets are likely to play a significant role in financing catastrophic risk in the years ahead. It can also be expected that capital markets will be utilized in financing non-catastrophic risks, in such areas as run-offs and environmental risks.
Major Acquisitions in U.S. and Bermuda
Reinsurance Markets in 1998:
Buyer
Target Acquisition
General Electric Capital Corp.
Kemper Re
Berkshire Hathaway
General Re Corp.
Swiss Re
Life Re Corp.
Employers Reinsurance Corp.
IndustrialRisk Insurers
Exel Ltd.
Mid Ocean Ltd.
ACE Ltd.
Cat Ltd.
Partner Re Ltd
Winterthur Re
Gerling
Constitution Re
As we peer into 1999, one clear fact emerges from our review of the finances of the reinsurance industry: this is a great buyer’s market with abundant capacity and declining prices.-
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