More and more signs of recovery are being reported across the industry as the year approaches the end of the first quarter. And increasingly, more industry players are concurring. The latest, Scor SE, recently reported that its property and casualty reinsurance segment returned an 8.8-percent growth in gross written premiums at January renewals, reinforcing belief that there is real and sustained recovery in the insurance and reinsurance markets.
Although Scor is based in Europe, its portfolio is global and has a large American component. Its positive assessment of the market provides this early a strong impetus across the U.S. insurance landscape for insurers and reinsurers to rally their troops and resources—but especially agents in natural-calamity-prone areas such as Texas, who already have an Texas insurance license or are currently working to renew via the mandatory Texas insurance CE.
Scor Global P&C stated that premiums improved to US$5.28 billion (3.98 billion euros), with property and casualty treaty premiums rising 12 percent and specialty treaty business, 18 percent. Scor also pointed out that the geographical diversification of business has increased, with the Americas now hugging 21 percent of premiums and Asia, about 11 percent.
Economic uncertainties, however, are affecting pricing in lines exposed to them. These lines, according to Scor, include credit, construction/erection all risks, and marine.
Meanwhile, Scor identified the following: technical profitability is stable, as measured by the combined ratio and the remuneration of allocated capital; terms and conditions remain unchanged, but for contracts and regions affected by 2011’s natural disasters, which mostly happened in the Asia-Pacific. Scor reported prices climbing 29.9% for natural catastrophe business.
In reaction, Scor is rebalancing its portfolio by shifting more exposure into U.S. natural catastrophe risks, where pricing has gone up 13.2 percent, compared with just 4.6 percent in Europe.
Meanwhile, a modest but solid increase in merger and acquisition activity in the property and casualty insurance industry is expected this 2012, revealed a Towers Watson & Co. survey released this January.
Called “Property & Casualty Insurance CFO Survey #2: Mergers and Acquisitions,” the survey showed that 55 percent of the chief financial officers who participated in the survey professed they would consider acquiring a company this year, while 50 percent said they would consider acquiring a block of business. Thirty percent of the respondents stated that in 2011 they had acquired or pursued another company and 20 percent reported that they had acquired or attempted to acquire a block of business.
The growth activity in the property and casualty sector is yet another indication of the growing body of evidence of the return to health of the insurance industry.
The Towers Watson & Co. report, however, also noted that the pool of potential acquisitions is small; only 5 percent of the respondents confirmed that they might sell a company, while 15 percent said they could consider selling a block of business in 2012.
Most of survey respondents who were considering mergers and acquisitions in 2012 were considering standard and specialty commercial lines. According to the survey, “The primary reason for an acquisition by companies that considered or completed a transaction is growth via market and product expansion, and the major target is the United States.”