Bermuda


the companies based there can be fascinating, as their divergent strategies often yield varying results.


T Many estimators now acknowledge 2011 as being the worst year for insured


losses globally in recorded history. For property-catastrophe insurers and reinsurers, in particular, it was an extremely painful year and in Bermuda, where property-cat risks are the mainstay of business, the agony was especially acute.


The catastrophe events of 2011, coupled with crippling investment


returns, meant that as companies began to report their full year 2011 results, net losses were the story of the day. And those that did manage to turn a profit usually reported a vastly diminished return compared with 2010.


But there was some hope. Gross written premiums, on the whole, grew


in 2011. This means that if 2012 remains relatively catastrophe-free and companies also manage to push through some rates increases, many companies will hope to return decent profits.


To establish as comprehensive a summary of the situation in Bermuda as possible, Intelligent Insurer approached some of the biggest players domiciled on the Island, along with companies with substantial subsidiaries there, to analyse how they coped with such a turbulent year and what their strategies are for the future.


It is interesting to see how the different strategies of these companies


have influenced, and have been reflected in, their results. Note: All non-percentage figures are in US$ millions.


ACE LIMITED 2011


Gross premiums written


Net premiums written


Net income 20,831 15,372 1,585


Combined ratio 94.6% (Claims ratio: 65.7%, Expense ratio: 28.9%)


Return on average common equity


10.7%


he collective performance of insurers and reinsurers based on Bermuda is often used as a weathervane for the rest of the industry based in other part of the world. Yet a comparison of


“We continue to pursue opportunities for


profitable growth in our businesses around the globe and we are well positioned to do so into the future.”


Evan Greenberg, chairman and chief executive officer of ACE Limited,


retains confidence in the company’s strategy of working to achieve product and geographic diversification while maintaining underwriting discipline. “This has given us a greater balance between those product areas exposed to the P&C pricing cycle and those that are not,” he noted when reviewing ACE Limited’s full year 2011 results.


“We continue to pursue opportunities for profitable growth in our


businesses around the globe and we are well positioned to do so into the future,” he said, adding that he is also willing to trade market share for underwriting profit.


ALLIED WORLD ASSURANCE COMPANY 2011 1,940


Gross premiums written


Net premiums written


Net income 1,533 275 2010 19,511 13,708 3,108


90.2% (Claims ratio: 59.2%, Expense ratio: 31%)


13.1% 2009 19,164 13,299 2,549


88.3% (Claims ratio: 58.8%, Expense ratio: 29.5%)


15.7% Although the ACE group (ACE Limited) is now incorporated in


Switzerland, it has two substantial subsidiaries based in Bermuda: ACE Bermuda Insurance and ACE Tempest Reinsurance.


On a group level, ACE Limited wrote considerably more premiums in


2011 than in the past two years, but its net income was around half of that of the previous year.


16 | INTELLIGENT INSURER | Spring 2012


Combined ratio 95.9 (Claims ratio: 65.8%, Expense ratio: 30.1%)


Return on average common equity


8.9%


2010 1,758


1,392 665


84.9% (Claims ratio: 52.1%, Expense ratio: 32.8%)


21.9%


2009 1,696


1,321 607


76.1% (Claims ratio: 45.9%, Expense ratio: 30.2%)


22.6%


Before celebrating its first 10 years in business during 2011, Allied World Assurance Company also announced the re-domiciliation of its new head office operations to Zug, Switzerland, in 2010.


Scott Carmilani, the company’s president and chief executive officer,


says the move would provide greater proximity to its clients in continental Europe and enable the business to broaden its product offerings in Europe. “This is another step forward for our company as we continue to expand our global operating platform,” he says.


Commenting on the company’s full year results for 2011, Carmilani


says that Allied World Assurance Company is well positioned for 2012. “Ultimately, we judge ourselves by our ability to build shareholder value and we grew diluted book value per share by 8 percent in what was a volatile 2011. This reflects our robust risk management controls, strong ratings and a healthy capital base,” he says.


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