Mixed outcomes for Bermuda’s re/insurers

For Bermuda’s re/insurers the first six months of 2018 have seen a fairly mixed bag of results. Some companies have done well, with healthy profits and gross written premiums up. Others have not, with profits down and some firms reporting losses.

Looking at the companies that did the best over the period, AXIS Capital Holdings made a profit of $93 million in the second quarter of 2018, compared to net income of $85 million for the same period of 2017.

The quarter’s results took the company to a first half 2018 profit of $155 million, a substantial rise from the $90 million it made over for the same period in 2017.

Operating income for the second quarter of 2018 was $106 million, compared to operating income of $110 million for the second quarter of 2017. For the six months ended June 30, 2018, AXIS Capital reported operating income of $229 million, compared to operating income of $161 million for the same period in 2017.

Its gross premiums written increased by $288 million, or 21 percent, to $1.7 billion, with an increase of 34 percent in the insurance segment, primarily attributable to the acquisition of Novae Group on October 2, 2017, and an increase of 4 percent in the reinsurance segment.

AXIS pointed out that adjusting for the impact of the Novae acquisition, gross premiums written decreased by $36 million, or
3 percent, with a decrease of $29 million, or 4 percent in the insurance segment and a decrease of $7 million, or 1 percent in the reinsurance segment.

Hiscox boosted

Hiscox was another company with positive news from its results after it made a pre-tax profit of $163.6 million for the first half of 2018, an increase from the $129.1 million it posted for the first six months of 2017.

The company said that gross written premiums increased by
21.4 percent from $1.84 billion in the first half of 2017 to $2.23 billion in the same period of 2018. Net earned premiums went from
$1.18 billion in the first half of 2017 to $1.28 billion in 2018 so far.

Following functional currency changes to the US dollar Hiscox said it had seen a reduced impact of foreign exchange resulting in a smaller loss of $8.5 million (2017: loss of $38.8 million). The net combined ratio for the first six months of 2018 was 87.9 percent, down on the 90.8 percent it reported for the first six months
of 2017.

International General Insurance Holdings, which owns reinsurer IGI Bermuda, has reported a net profit of $11 million for the first six months of 2018, down from the $14.8 million it made in the same period of 2017.

However, the company also reported a 20 percent rise in gross premiums written from $138.12 million in June 2017 to $165.87 million in June 2018. According to the company growth occurred across all IGI’s major lines of business.

James River Group Holdings has reported second quarter 2018 net income of $17.0 million, an increase on the $14.5 million it made for the second quarter of 2017.

Adjusted net operating income for the second quarter of 2018 was $17.6 million, compared to $14.9 million for the same period in 2017.

The company reported an underwriting profit of $5.5 million for the quarter, an improvement of 33 percent over the prior year quarter.

Net investment income was $16.1 million, an increase of 18 percent, or $2.4 million, over the prior year quarter.

The company also reported 15 percent growth in core (non-commercial auto) excess and surplus lines gross written premium driven by strong growth in the general casualty, excess casualty, life sciences and small business divisions.

RenaissanceRe Holdings has reported increased profits in its second quarter 2018 results, but has added the caveat that ‘meaningful uncertainty’ existed around claims from losses from 2017.

The company said that net income for the second quarter of the year came to $191.8 million, up on the $171.1 million it made in the second quarter of 2017. Operating income was $209.6 million in the second quarter of 2018, compared to $116.8 million in the second quarter of 2017.

The company posted a 7 percent rise in gross underwriting profits of $23.75 million, mainly due to growth in gross earned premium from last year, partially offset by increase in net claims incurred primarily due to strengthening of IBNR.

Cloudier skies

It was a more mixed picture for others. PartnerRe reported that it made a profit of $125 million for the second quarter of 2018, a
35 percent fall from the $191 million it made over the same period of 2017.

However, the quarter’s results take PartnerRe to a first half 2018 net profit of $5 million, down 98 percent from the $229 million it made in the same period of 2017. The company reported first half 2018 net unrealised investment losses on fixed income securities of $312 million. In the same period of 2017 PartnerRe announced net unrealised investment gains on fixed income securities of
$137 million.

According to the company unrealised investment losses on fixed income securities in 2018 were driven by an increase in risk-free rates and credit spreads and the unrealised investment gains on fixed income securities in 2017 were driven by a narrowing of credit spreads. The majority of the company’s investments, including all standard fixed income investments such as government bonds and investment grade corporate debt, are accounted for at fair value with changes in the fair value recorded in its consolidated statements of operations.

XL Group, which is preparing for its takeover by AXA, announced that it made a net profit of $319 million for the second quarter of 2018, up from the $301.6 million it made in the same quarter of 2017.

However, the company said that operating net income for the quarter came to $220.3 million, down from the $255.1 million it made in the second quarter of 2017.

XL Group said that property and casualty (P&C) gross premiums written increased 10.6 percent compared to the prior year quarter and increased by 7.8 percent excluding the impact of foreign exchange. Insurance rate increase year to date through June was 3.8 percent and the reinsurance rate increase year to date through July was 3.7 percent.

The company also reported natural catastrophe pre-tax losses net of reinsurance, reinstatement and premium adjustments for the quarter of $76.8 million (2.9 points to the loss ratio), compared to $92.1 million (3.7 points to the loss ratio), in the prior year quarter.

Qatar Insurance Company Group (QIC), the insurance group that owns Bermuda-based Qatar Re, has reported that it made a net profit of $106 million in the first half of 2018, down 24 percent from the $139 million it reported for the same period of 2017.

Gross written premiums for the period rose slightly from $1.7 billion in the first half of 2017 to $1.8 billion in the first half of 2018. However, its net investment result fell severely from $155 million in the first six months of 2017 to $112 million in the same period of 2018.

QIC reported a combined ratio of 100.5 percent in the first half of 2018, compared to the 101.5 percent it reported in the same period of the previous year.

Argo sticks to the plan

Argo Group announced that its second quarter and first half 2018 profits fell slightly compared to the same period of 2017, but that it was making good progress with its overall business plan.

Second quarter 2018 net income was $41.8 million, compared to net income of $46 million for the 2017 second quarter. Addressing this fall the company said that in the first quarter of 2018, the company adopted a new accounting standard and as a result the 2018 second quarter net income was favourably impacted by an after-tax gain of $3.4 million, whereas the 2017 second quarter included an after-tax net investment gain of $9.3 million relating to the net asset sales of an equity investee.

Argo said that the quarter’s results took the company to a net profit of $66.6 million, down on the net income of $82.7 million that it reported for the 2017 six-month period. It stated that the 2018 six-month period net income was adversely impacted by an after-tax loss of $21.3 million.

Chubb has announced second quarter 2018 net income of $1.29 billion, a slight fall from the $1.305 billion for the same quarter last year.

Core operating income was $1.253 billion for the quarter, up from the $1.18 billion it made for the same quarter last year. The P&C combined ratio was 88.4 percent.

According to the company it was unfavourably impacted by realised and unrealised losses of $407 million after-tax in the company’s investment portfolio, driven by rising interest rates. In addition, foreign currency movement unfavourably impacted book value by $457 million after-tax and tangible book value by $200 million after-tax.

The quarterly results took Chubb to a first half 2018 net income total of $2.4 billion, a slight fall from the $2.398 billion it reported for the same period of 2017. Core operating income for the first six months of 2018 was $2.35 billion, compared with $2.355 billion, for the first half of 2017. The P&C combined ratio was 89.2 percent for the six months ended June 30, 2018. Again, the company was unfavourably impacted by net realised and unrealised losses of $1.345 billion after-tax in the company’s investment portfolio. In addition, FX unfavourably impacted book value by $147 million after-tax and tangible book value by $64 million after-tax.

Third Point Re made a profit of $19.6 million for the second quarter of 2018, a severe fall from the $74.6 million it made over the same period of 2017.

For the six months ended June 30, 2018, Third Point Re reported a net loss $6.4 million, compared to net profit of $178.8 million for the same period of 2017.

Brit has announced that it made a first half 2018 net profit of $12.9 million, down significantly from the $139.7 million it made over the same period of 2017.

However, the company announced that gross written premiums for the period were $1.15 billion, up 5.3 percent from the equivalent 2017 figure of $1.09 billion.

The company also reported premium rate increases of 3.5 percent, an improvement on 2017’s decreases of 2.2 percent. Net earned premium came to $783.5 million, an increase of 3.4 percent from the 2017 total of $740.7 million.

The company also noted that the first half of 2018 included the successful January 1, 2018 launch of Bermuda-based Sussex Capital, the open-ended fund which writes through Sussex Re, providing direct collateralised reinsurance and collateralised reinsurance to Brit’s reinsurance portfolio. The half also saw the successful completion and expansion of the fourth annual Versutus Series Notes, offering continued access to Brit’s strong underwriting franchise.

Arch Capital Group saw profits rise in the second quarter of 2018, announcing that net income for the period came to $233.2 million, up 26 percent from the $173.8 million it posted in the same period of 2017.

However, the company posted a half-year 2018 profit of $370.2 million, down on the $415.7 million it reported for the first six months of 2017.

Gross written premiums for the second quarter of 2018 came to $1.7 billion, a rise of 5.4 percent from the $1.6 billion it wrote for the same period of 2017.

Overall, Arch grew underwriting income by 20.5 percent year on year to $235.5 million in the second quarter of 2018 after $195.4 million in the same period a year ago. The combined ratio improved to 82.7 percent from 84.6 percent over the period.

Stormy weather

For a number of companies the period brought losses instead of profits. White Mountains Insurance Group has reported that it made a profit of $3 million in the second quarter of 2018, down severely on the $14 million it made in the same period of 2017.

However, the quarter takes the company to a loss of $45 million for the first half of 2018, again a severe fall from the profit of $43 million that it made in the first six months of 2017.

At the start of August, weeks before the announcement that it was being acquired by affiliates of Apollo funds, Aspen Insurance Holdings reported that it made a net loss after tax of $14.7 million and operating income after tax of $56.3 million for the second quarter of 2018.

Gross written premiums were $853.8 million in the second quarter of 2018, an increase of 3.9 percent compared with $822.1 million in the second quarter of 2017

Aspen’s insurance reported gross written premiums of $527.8 million, an increase of 8.5 percent compared with $486.5 million in the second quarter of 2017 due to growth across all sub-segments. The company’s reinsurance segment reported gross written premiums of $326.0 million, a decrease of 2.9 percent compared with $335.6 million in the second quarter of 2017 due to a decrease in specialty sub-segment premiums which was partially offset by growth in all other sub-segments.

The quarterly loss contributed to Aspen making a profit of $16.1 million in the first six months of 2018, down heavily on the $172.3 million profit it made for the same period of 2017. Net income in the first half of 2018 included $58.4 million of net realised and unrealised investment losses and $22.1 million of net realised and unrealised foreign exchange losses compared with net realised and unrealised investment gains of $88.2 million and $8.8 million of net realised and unrealised foreign exchange losses in the same period of 2017. Net income in the first half of 2018 also included an $8.6 million make-whole payment associated with the partial redemption of Aspen’s 6 percent Senior Notes due 2020.

And Maiden Holdings made further losses in the second quarter of 2018 and its gross written premiums also dipped as it continues to grapple with the impact of the operational changes taking place in underlying claims associated with AmTrust, a significant part of the portfolio.

The company made a net loss of $5.9 million in the second quarter of 2018, an improvement on the loss of $22.4 million it made in the same period a year earlier. Its combined ratio was 106 percent, almost identical to the 105.8 percent it posted a year earlier.

In the first six months of 2018, the diversified reinsurance segment produced an underwriting loss of $1.2 million compared to a loss of $26.3 million in the same period of 2017.

Overall, the combined ratio of the group was 103.9 percent in the first six months of 2018 compared to 103.4 percent in the same period a year ago.

With the third quarter of the year now over and the end of
year renewals approaching, as well as the fourth quarter, the market will be hoping for a quieter end for 2018 than it saw for 2017. Time will tell.