First quarter results from European Reinsurers indicate an improved profits outlook for 2004, according to the European Reinsurance Quarterly from Benfield.
It said profit growth was supported by improved technical results and the absence of significant investment write-downs.
But the good start to the year was tempered by signs of emerging price competition and the continuing threat of reserve strengthening which could hit results later, warned Benfield.
It added that although the burden of large losses increased during the first quarter, it remained within long-term trends.
Better pricing in the first quarter led to an improvement in combined ratios, and investment income rose, said Benfield.
It said disciplined underwriting with business falling short of demanding pricing hurdles being declined, was a contributor to a drop in premiums, it said.
“European reinsurers' senior management are adamant that underwriting discipline will be maintained, and they are prepared to sacrifice volume for profitability,” notes the report. “Successful enforcement will be a critical factor for the financial health of the industry.”
A full copy of the report is available from benfield.com/research.
