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July renewals: making the most of less reinsurance. (Special Report: Insurance Executive).

For buyers and sellers of reinsurance, July 2002 becomes a question of how much to retain how little protection to live with, and how to enforce underwriting discipline.

Liberty Mutual, the nation's top writer of workers' compensation insurance, knows it will have to make do with a lot less reinsurance protection this year when it renews some of its big programs in July. Last year, liberty Mutual had no trouble finding cheap and plentiful reinsurance, with terrorism coverage and coverage reinstatements usually thrown in for free.

This year is another story.

"I would characterize the reinsurance programs we've purchased now as minimally acceptable," says Brian Melas, senior vice president commercial markets at Liberty Mutual. "I don't see us having the program we had a year ago for the foreseeable future."

With the July renewals approaching fast, insurers are thinking hard about how much risk they can retain and how much protection they can afford.

Although most property programs still renew in January, many of the large commercial property programs impacted by the World Trade Center renew on either April 1 or July 1, says Rod Thaler, executive vice president and national director at broker Willis.

In addition, a number of big insurers, such as Travelers, Hartford, Liberty Mutual, and CNA have large programs renewing this July. And when they do, they are likely to see rates up sharply compared with a year ago, though still about in line with January's rate increases, industry sources say.

"I think the key is we need to make the same kind of correction on July renewals as we made on the January renewals," says Mark Lescault, chief underwriting officer for Swiss Re Americas division.

Reinsurers say they can't afford not to. U.S. reinsurers posted losses of $5.7 billion in 2001 and in the fourth quarter, the loss was almost $1.9 billion, as reported by the Reinsurance Association of America (RAA). The combined ratio was 139.6 percent for 2001 and 153 percent in the fourth quarter, the worst ratios since the mid-1980s (see chart, page 28).

"We need to have the underwriting discipline to not have a six month hard market," Lescault says. "We can not afford that."

The industry's losses are not just the result of the September 11 terrorist attack, which caused an estimated $30 billion to $40 billion in insured losses, but are also the result of years of intense price competition, industry sources say. Low interest rates compounded the problem last year by holding down investment gains, which often help offset underwriting losses.

The sector also has had to contend with the collapse of Enron, resulting in an insured loss estimated at about $3.8 billion, and worries about losses from cyber risk and toxic mold also contributed.

Frail Before 9/11

"I think the point is the industry was frail before 9/11," says Rick Smith, president and chief executive of Employers Re's global property and casualty business. "It had some good rate increases working through, but it was still frail. The combined ratios were still far too high, the interest rate environment was still too low; 9/11 just inflicted more pain. The need for fundamental change in the industry was here before 9/11," Smith says.

Bear Stearns analyst Michael Smith, in a report issued in March, described the reinsurance industry's results last year as "terrible, with deep operating losses driven by catastrophe losses and simply the recognition of poor underwriting decisions made over the past several years."

He says the year-end RAA data supported his expectations for "an exceptionally strong rebound in pricing in the property-casualty insurance markets."

So what lessons were learned from the April 1 renewals that might be a gauge for July?

At April 1, Thaler says, he saw some segregation of payback for programs that incurred large losses in the World Trade Center. Under such an arrangement, the purchaser of reinsurance can segregate the terms of its program to make sure more of its business goes to the reinsurers that paid its loss, Thaler says. That way, it would not unfairly enrich those reinsurers that did not pay the loss.

But other April 1 programs that had losses chose to have just one overall set of terms, he says. "Something like that would be more attractive to new reinsurers because they could benefit by participating on the same terms as the reinsurers that paid the loss."

Such segregated payback, or nonconcurrent terms, were very rare back in 1992 and 1993 and that helped to jumpstart the new property catastrophe reinsurers that were formed at that time. "I think there's going to be a greater delineation in clients' minds as to payback versus one overall price," he says.

Reinsurance buyers also know they will be paying more. Rates are up an average of about 35 percent and there are some risks that are up 100 percent and more, says Don Watson, a director of Standard & Poor's Financial Services Ratings in New York.

But that was not as much as some expected immediately after September 11. "Word on the street is that the increases were not quite as much as some had hoped for," Watson says. "Some of the expectations were unrealistic. There's a limited ability, ultimately, to raise price."

Global/national accounts that were hit with losses from the World Trade Center attack are likely to see their property reinsurance premiums jump 50 percent to 75 percent and possibly higher, Thaler says. Property reinsurance premiums represent the subject premium--or the premium subject to the cover--multiplied by the adjustable rate. Because ceding reinsurers have raised the rates on their business, their subject premium has increased. And with the subject premium up, even a relatively small rate increase could generate a very meaningful reinsurance premium increase.

That may mitigate the need for reinsurers to sharply increase their adjustable reinsurance rate, Thaler says. "A rate increase could be 15 to 25 percent, but the reinsurance premium increase could be 100 percent. What is important is the amount of increase in the reinsurance premium."

Casualty and Other Lines

On casualty lines, reinsurance premiums were up 25 percent to 30 percent before September 11 and return on equity requirements have most likely increased since then, Thaler says. Other lines facing big corrections include directors' and officers', errors and omissions, medical malpractice, and pharmaceutical liability, industry sources say.

"The D&O business is seriously underpriced and the rate increases we've seen in January were not enough. We still have a lot further to go to bring that line back to health," Lescault says. "Pharmaceuticals is another area where we're still seeing some very large losses, and there needed to be a significant pricing correction. We've seen a number of very large losses worldwide."

In addition to raising rates, reinsurers are no longer giving away coverage as they once did as a marketing tool during the soft market. "You're seeing a significant tightening in terms and conditions, really taking back some of the terms and conditions the industry lost during the soft market," ERC's Smith says. "Things that used to be free are no longer free. It's facing the reality that we need more underwriting discipline. During the soft market, when market share was the concern of the industry, those terms tended to become lax."

Reinsurers are also trying to get their clients to share more of their risk and say they are walking away from business deemed to be a bad risk. "In our business, we spent a lot of time rethinking the business model and we are not interested in being everything to everybody, rather finding customers and partners who are philosophically aligned to us, where we add value," Smith says.

Reinsurers say this year's rate increases are a step in the right direction. But industry experts say it's anyone's guess how long the hard market will last. Some say the hard market has to last several years because reinsurers just can't afford to lower rates any time soon.

But with about $20 billion to $30 billion of new capital injected into the market since September 11, some say prices may come under pressure again sometime soon. About $9 billion of the new capital went into start-ups and another $20 billion went into existing entities, S&P's Watson says.

The new start-ups are the most prone-to cutting prices because they are unencumbered by claims from past business and are often under more pressure to show immediate returns to investors. "The pressure is going to hit, and I don't think it will hit in July. It's going to hit toward the end of this year," Watson says.

So far the new capacity has not been seeking to undercut the expiring reinsurers, Thaler says, and buyers have not been abandoning their longtime relationships in favor of the new kids. "The new capacity is coming in to help stabilize the degree of increases, but it is not coming in to lead and undercut," Thaler says. "Part of it is staffing and part of it's that they don't want to be seen undercutting."

ERC, for one, says it will hold the line. "That's not a game I want to play," Smith says. "Just chasing low prices will not be a part of our strategy going forward."

But, as much as reinsurers protest that they will hold the line on price, "it's naive to think that (discounting) won't happen," Thaler says.

Buyers of reinsurance are responding to the price increases by increasing their retentions and by trying to better manage their exposures, industry sources say.

There has not, however, been a huge increase in demand for risk securitization, S&P's Watson says. "There's been some activity, but not remarkably more."

Ceding companies that decide to increase their retentions may increase the retention for the first loss, but then buy reinsurance for the second and subsequent loss over lower retentions, Thaler says.

Liberty Mutual executives say the company is retaining more risk, but is also asking its own customers to share more of the risk as well. The insurer also is now tracking its liability exposures by coding policies by zip code to avoid taking on too much risk in anyone geographic location, Melas says.

And in workers' comp, Liberty Mutual is looking for ways to share risk with its customers. "We're not going to walk away from our customers," Melas says. But the company does have to be a little more selective.

Still, insurers are often unable to get the protection they want for terrorism losses, especially on large commercial property programs and on workers comp programs.

"I always hate it when people come out and say there's no problem getting terrorism coverage, because there is a problem," Thaler says. "There still is a need for a federal solution and sadly it may require another terrorist act before that becomes crystallized" for everyone in Congress.

"Reinsurers are still mindful of the wildcard exposure they have in runoff," he says. "They have full coverage for terrorism in many treaties that are currently being runoff that have runoff provisions. So reinsurers are reluctant to provide terrorism coverage because it doubles up with the exposure they have in the existing treaties where they can't exclude it."

Reinsurers are more willing to tackle coverage for catastrophes like hurricanes and earthquakes because they can be modeled and priced accordingly, Smith says. But it is difficult to model and price for terrorism.

And the insured terrorism loss fell on just a small portion of the overall insurance industry, Thaler says.

Even though the overall insurance industry has capital of about $300 billion, the commercial property insurance industry, which absorbed most of the losses from the terrorist attack, has capital of only about $100 billion to $150 billion. The WTC losses are estimated at more than $30 billion.

"There isn't sufficient capital in the business to absorb another blow comparable in size to the World Trade Center because the vast amount of capital in the insurance business doesn't write commercial business," Thaler says. "The burden of the many fell upon the few."
Standard & Poor's Top 25 Reinsurance Groups

Ranked By Net Reinsurance Premiums Written (USD In Millions)

 Net Reinsurance
 Premiums Written
Rank Company 2000 1999

1 Munich Reinsurance Group 15,276.6 13,553.9
2 Swiss Reinsurance Group 14,478.8 12,853.2
3 Berkshire Hathaway Reinsurance 8,574.7 9,452.5
 Group (2)
4 Employers Reinsurance Group 7,924.0 6,921.0
5 Hannover Reinsurance Group 4,994.3 4,171.9
6 Gerling Global Reinsurance Group 4,117.0 3,921.9
7 Lloyd's 3,952.9 3,807.8
8 Allianz Reinsurance Group 3,726.5 3,295.9
9 SCOR Reinsurance Group 2,809.8 2,718.1
10 Zurich Reinsurance Group 2,485.0 1,878.0
11 Transatlantic Holdings Inc. 1,658.6 1,498.5
12 AXA Reinsurance Group (3) 1,424.7 1,137.6
13 Partner Re Ltd. 1,380.3 1,326.4
14 St. Paul Reinsurance Group 1,251.5 1,056.4
15 Everest Reinsurance Group, Ltd. 1,218.9 1,095.6
16 XL Re Group 1,022.2 970.0
17 Korean Reinsurance Co. 977.5 755.5
18 CNA Reinsurance Group 951.0 1,275.0
19 Toa Reinsurance Company Ltd. 942.4 1,101.8
20 Hartford Reinsurance Co. 825.9 703.0
21 Tokio Marine & Fire Insurance Co. 705.3 843.2
 Ltd. (3)
22 Odyssey Reinsurance Group 701.3 502.6
23 ACE Tempest Reinsurance Ltd. 699.1 145.7
24 Caisse Centrale de Reassurance S.A. 694.9 792.5
25 Sirius International Insurance 599.1 435.7
 Group
Totals 83,392.1 76,213.7

 AdjustedSharehold
 ers'
 % Funds (1)
Rank Company Change 2000

1 Munich Reinsurance Group 12.7% 19,437.0
2 Swiss Reinsurance Group 12.6% 14,139.4
3 Berkshire Hathaway Reinsurance -9.3% 40,140.0
 Group (2)
4 Employers Reinsurance Group 14.5% 6,025.0
5 Hannover Reinsurance Group 19.7% 1,481.5
6 Gerling Global Reinsurance Group 5.0% 1,388.4
7 Lloyd's 3.8% 8,268.4
8 Allianz Reinsurance Group 13.1% 53,414.1
9 SCOR Reinsurance Group 3.4% 1,267.4
10 Zurich Reinsurance Group 32.3% 1,541.6
11 Transatlantic Holdings Inc. 10.7% 1,856.4
12 AXA Reinsurance Group (3) 25.2% 1,628.2
13 Partner Re Ltd. 4.1% 2,086.0
14 St. Paul Reinsurance Group 18.5% 7,178.0
15 Everest Reinsurance Group, Ltd. 11.3% 1,583.4
16 XL Re Group 5.4% 5,573.7
17 Korean Reinsurance Co. 29.4% 323.4
18 CNA Reinsurance Group -25.4% 8,387.0
19 Toa Reinsurance Company Ltd. -14.5% 2,204.0
20 Hartford Reinsurance Co. 17.5% 5,668.0
21 Tokio Marine & Fire Insurance Co. -16.4% 20,432.2
 Ltd. (3)
22 Odyssey Reinsurance Group 39.5% 957.9
23 ACE Tempest Reinsurance Ltd. 379.9% 1,281.6
24 Caisse Centrale de Reassurance S.A. -12.3% 1,131.4
25 Sirius International Insurance 37.5% 849.7
 Group
Totals 9.4% 208,243.7

 AdjustedSha
 reholders'
 Funds (1) %
Rank Company 1999 Change

1 Munich Reinsurance Group 16,517.5 17.7%
2 Swiss Reinsurance Group 11,123.8 27.1%
3 Berkshire Hathaway Reinsurance 39,580.0 1.4%
 Group (2)
4 Employers Reinsurance Group 5,575.0 8.1%
5 Hannover Reinsurance Group 1,240.8 19.4%
6 Gerling Global Reinsurance Group 1,333.9 4.1%
7 Lloyd's 9,093.1 -9.1%
8 Allianz Reinsurance Group 45,376.3 17.7%
9 SCOR Reinsurance Group 1,241.1 2.1%
10 Zurich Reinsurance Group 1,503.8 2.5%
11 Transatlantic Holdings Inc. 1,642.5 13.0%
12 AXA Reinsurance Group (3) 1,268.0 28.4%
13 Partner Re Ltd. 1,840.7 13.3%
14 St. Paul Reinsurance Group 6,448.0 11.3%
15 Everest Reinsurance Group, Ltd. 1,327.5 19.3%
16 XL Re Group 5,577.1 -0.1%
17 Korean Reinsurance Co. 262.1 23.4%
18 CNA Reinsurance Group 8,679.0 -3.4%
19 Toa Reinsurance Company Ltd. 2,933.3 -24.9%
20 Hartford Reinsurance Co. 6,897.8 -17.8%
21 Tokio Marine & Fire Insurance Co. 13,061.9 56.4%
 Ltd. (3)
22 Odyssey Reinsurance Group 806.3 18.8%
23 ACE Tempest Reinsurance Ltd. 1,151.4 11.3%
24 Caisse Centrale de Reassurance S.A. 1,018.0 11.1%
25 Sirius International Insurance 800.5 6.2%
 Group
Totals 186,299.4 11.8%


 Loss Ratio
Rank Company 2000 1999

1 Munich Reinsurance Group 85.0 88.2
2 Swiss Reinsurance Group 88.0 85.0
3 Berkshire Hathaway Reinsurance 94.8 94.7
 Group (2)
4 Employers Reinsurance Group 84.4 77.8
5 Hannover Reinsurance Group 85.8 71.1
6 Gerling Global Reinsurance Group 86.4 87.0
7 Lloyd's N.A. N.A.
8 Allianz Reinsurance Group 76.0 74.4
9 SCOR Reinsurance Group 88.0 80.7
10 Zurich Reinsurance Group 83.1 82.6
11 Transatlantic Holdings Inc. 73.4 77.4
12 AXA Reinsurance Group (3) 80.2 93.0
13 Partner Re Ltd. 70.2 77.1
14 St. Paul Reinsurance Group 79.2 69.3
15 Everest Reinsurance Group, Ltd. 75.3 72.0
16 XL Re Group 74.3 65.6
17 Korean Reinsurance Co. 76.4 75.2
18 CNA Reinsurance Group 81.6 84.9
19 Toa Reinsurance Company Ltd. 69.4 74.8
20 Hartford Reinsurance Co. 77.1 74.5
21 Tokio Marine & Fire Insurance Co. 60.3 62.1
 Ltd. (3)
22 Odyssey Reinsurance Group 73.9 75.5
23 ACE Tempest Reinsurance Ltd. 49.0 69.2
24 Caisse Centrale de Reassurance S.A. 75.6 98.7
25 Sirius International Insurance 80.0 N.A.
 Group
Totals 84.7 83.3


 Expense Ratio
Rank Company 2000 1999

1 Munich Reinsurance Group 30.3 30.7
2 Swiss Reinsurance Group 29.0 31.0
3 Berkshire Hathaway Reinsurance 16.8 22.7
 Group (2)
4 Employers Reinsurance Group 31.4 34.1
5 Hannover Reinsurance Group 20.8 24.8
6 Gerling Global Reinsurance Group 25.7 25.4
7 Lloyd's N.A. N.A.
8 Allianz Reinsurance Group 32.9 33.0
9 SCOR Reinsurance Group 32.0 29.0
10 Zurich Reinsurance Group 22.6 21.9
11 Transatlantic Holdings Inc. 26.5 27.8
12 AXA Reinsurance Group (3) 37.5 28.0
13 Partner Re Ltd. 32.3 32.7
14 St. Paul Reinsurance Group 34.8 31.2
15 Everest Reinsurance Group, Ltd. 27.6 31.5
16 XL Re Group 35.9 36.0
17 Korean Reinsurance Co. 21.4 23.4
18 CNA Reinsurance Group 27.3 31.5
19 Toa Reinsurance Company Ltd. N.A. 37.0
20 Hartford Reinsurance Co. 31.7 32.7
21 Tokio Marine & Fire Insurance Co. 36.0 36.4
 Ltd. (3)
22 Odyssey Reinsurance Group 36.9 35.9
23 ACE Tempest Reinsurance Ltd. 33.0 24.4
24 Caisse Centrale de Reassurance S.A. 12.5 22.5
25 Sirius International Insurance 23.0 N.A.
 Group
Totals 27.4 29.4

 Pre-Tax
 Operating Income
Rank Company 2000 1999

1 Munich Reinsurance Group 529.8 375.0
2 Swiss Reinsurance Group -384.7 217.7
3 Berkshire Hathaway Reinsurance N.A. 1,177.8
 Group (2)
4 Employers Reinsurance Group -11.0 245.0
5 Hannover Reinsurance Group 116.4 113.1
6 Gerling Global Reinsurance Group -43.6 -74.2
7 Lloyd's N.A. N.A.
8 Allianz Reinsurance Group 185.7 250.0
9 SCOR Reinsurance Group 71.6 128.5
10 Zurich Reinsurance Group 42.8 276.7
11 Transatlantic Holdings Inc. 234.9 153.3
12 AXA Reinsurance Group (3) -51.6 10.8
13 Partner Re Ltd. 161.3 66.9
14 St. Paul Reinsurance Group N.A. N.A.
15 Everest Reinsurance Group, Ltd. 230.9 213.3
16 XL Re Group 213.5 N.A.
17 Korean Reinsurance Co. 34.0 34.4
18 CNA Reinsurance Group 89.0 -28.0
19 Toa Reinsurance Company Ltd. 25.8 -22.4
20 Hartford Reinsurance Co. N.A. N.A.
21 Tokio Marine & Fire Insurance Co. 440.2 1,264.0
 Ltd. (3)
22 Odyssey Reinsurance Group 57.0 74.8
23 ACE Tempest Reinsurance Ltd. 156.4 57.2
24 Caisse Centrale de Reassurance S.A. 178.6 -68.0
25 Sirius International Insurance 67.6 125.0
 Group
Totals 2,344.5 4,590.9

 Return On
 % Revenue
Rank Company Change 2000

1 Munich Reinsurance Group 41.3% 2.8%
2 Swiss Reinsurance Group -276.7% -2.3%
3 Berkshire Hathaway Reinsurance N.A. N.A.
 Group (2)
4 Employers Reinsurance Group -104.5% -0.1%
5 Hannover Reinsurance Group 2.9% 2.1%
6 Gerling Global Reinsurance Group N.A. -1.0%
7 Lloyd's N.A. N.A.
8 Allianz Reinsurance Group -25.7% 4.6%
9 SCOR Reinsurance Group -44.3% 2.5%
10 Zurich Reinsurance Group -84.5% 1.6%
11 Transatlantic Holdings Inc. 53.2% 12.6%
12 AXA Reinsurance Group (3) -577.6% -3.1%
13 Partner Re Ltd. 141.3% 10.2%
14 St. Paul Reinsurance Group N.A. N.A.
15 Everest Reinsurance Group, Ltd. 8.2% 15.6%
16 XL Re Group N.A. 16.8%
17 Korean Reinsurance Co. -1.2% 3.4%
18 CNA Reinsurance Group N.M. 6.9%
19 Toa Reinsurance Company Ltd. N.M. 2.5%
20 Hartford Reinsurance Co. N.A. N.A.
21 Tokio Marine & Fire Insurance Co. -65.2% 3.1%
 Ltd. (3)
22 Odyssey Reinsurance Group -23.8% 7.0%
23 ACE Tempest Reinsurance Ltd. 173.4% 23.6%
24 Caisse Centrale de Reassurance S.A. N.M. 22.7%
25 Sirius International Insurance -45.9% 9.1%
 Group
Totals -48.9% 2.5%

 Return On
 Revenue
Rank Company 1999

1 Munich Reinsurance Group 2.2%
2 Swiss Reinsurance Group 1.5%
3 Berkshire Hathaway Reinsurance 13.4%
 Group (2)
4 Employers Reinsurance Group 2.9%
5 Hannover Reinsurance Group 2.4%
6 Gerling Global Reinsurance Group -1.8%
7 Lloyd's N.A.
8 Allianz Reinsurance Group 6.8%
9 SCOR Reinsurance Group 4.5%
10 Zurich Reinsurance Group 12.7%
11 Transatlantic Holdings Inc. 8.9%
12 AXA Reinsurance Group (3) 0.9%
13 Partner Re Ltd. 4.1%
14 St. Paul Reinsurance Group N.A.
15 Everest Reinsurance Group, Ltd. 16.1%
16 XL Re Group N.A.
17 Korean Reinsurance Co. 4.2%
18 CNA Reinsurance Group -2.1%
19 Toa Reinsurance Company Ltd. -2.1%
20 Hartford Reinsurance Co. N.A.
21 Tokio Marine & Fire Insurance Co. 7.1%
 Ltd. (3)
22 Odyssey Reinsurance Group 11.7%
23 ACE Tempest Reinsurance Ltd. 28.4%
24 Caisse Centrale de Reassurance S.A. -8.6%
25 Sirius International Insurance 21.8%
 Group
Totals 4.8%

(1) Reported adjusted shareholders' funds include both primary and
reinsurance operations.

(2) Standard & Poor's has estimated the 1999 and 2000 expense and loss
ratios.

(3) All figures (except net reinsurance premiums written) include
primary and reinsurance businesses. Assicurazion Generali Group (Italy)
failed to provide its figures. Therefore, it is not included in this
year's top 25 groups.

N.A. Not available

N.M. Not meaningful
RAA's U.S. Reinsurance Underwriting Report

STATUTORY RESULTS (IN THOUSANDS)

 Net
 Reinsursnce
 Premiums
 Written
Reinsurer Dec-01

American Agricultural Insurance Company 299,033
American Re-Insurance Company 2,761,559
Axa Corporate Solutions Reinsurance Co. 359,548
Berkley Insurance Company (1) 436,319
Berkshire Hathaway Reinsurance 1,216,511
Group

CNA Re 546,345
CNA Re * 684,528
Converium Reinsurance (North America), Inc. (2) 839,064
EMC Reinsurance Company (3) 66,287
Employers Reinsurance Corporation (4) 3,706,697

Enhance Financial Group (5) 82,687
Everest Reinsurance Company 1,360,650
Farmers Mutual Hail Insurance Company of Iowa 41,600
Folksamerica Reinsurance Company 458,177
General Re Group (6) 3,959,691

Gerling Global Group (7) 760,128
Hartford Re Company 848,900
Insurance Corporation of Hannover 350,079
Odyssey America Re Corp./Odyssey Re Corp. (8) 891,952
Overseas Partners US Reinsurance Company (9) 82,746

Partner Re. U.S. (10) 500,073
PMA Capital Insurance Company 316,945
PXRE Reinsurance Company (11) 86,304
QBE Reinsurance Corporation 236,575
SCOR U.S. Group (12) 597,597

St. Paul Re (13) 1,494.381
St. Paul Re (13) * 1,614,540
Swiss Reinsurance America Corporation 1,647,179
The Toa Reinsurance Company of America 201,802
Transatlantic/Putnam Reinsurance Co 1,764,101
Trenwick America Reinsurance Corporation 287,968
XL Reinsurance America, Inc. 228,396

Total Reinsurance Affiliates 4,147,737
Total Reinsurance Affiliates * 4,406,079

Total Reinsurance Companies 22,281,557

TOTAL RESULTS 26,429,294
TOTAL RESULTS * 26,687,636

 Net
 Reinsurance
 Premiums
 Written
Reinsurer Dec-00

American Agricultural Insurance Company 304,278
American Re-Insurance Company 3,165,479
Axa Corporate Solutions Reinsurance Co. 275,768
Berkley Insurance Company (1) 444,684
Berkshire Hathaway Reinsurance 862,957
Group

CNA Re 466,989
CNA Re * 951,241
Converium Reinsurance (North America), Inc. (2) 959,759
EMC Reinsurance Company (3) 47,530
Employers Reinsurance Corporation (4) 3,996,052

Enhance Financial Group (5) 80,913
Everest Reinsurance Company 1,211,773
Farmers Mutual Hail Insurance Company of Iowa 37,698
Folksamerica Reinsurance Company 332,691
General Re Group (6) 3,516,783

Gerling Global Group (7) 897,568
Hartford Re Company 825,878
Insurance Corporation of Hannover 213,728
Odyssey America Re Corp./Odyssey Re Corp. (8) 609,251
Overseas Partners US Reinsurance Company (9) 3,295

Partner Re. U.S. (10) 369,264
PMA Capital Insurance Company 244,535
PXRE Reinsurance Company (11) 93,343
QBE Reinsurance Corporation 168,649
SCOR U.S. Group (12) 624,271

St. Paul Re (13) 976,580
St. Paul Re (13) * 1,155,805
Swiss Reinsurance America Corporation 1,758,729
The Toa Reinsurance Company of America 157,313
Transatlantic/Putnam Reinsurance Co 1,533,345
Trenwick America Reinsurance Corporation 187,354
XL Reinsurance America, Inc. 181,648

Total Reinsurance Affiliates N/A
Total Reinsurance Affiliates * 3,066,270 (14)

Total Reinsurance Companies 21,787,589 (14)

TOTAL RESULTS N/A
TOTAL RESULTS * 24,853,859 (14)

 Net
 Reinsurance Losses &
 Premiums Loss Adj.
 Earned Expenses
Reinsurer Dec-01 Dec-01

American Agricultural Insurance Company 287,378 257,060
American Re-Insurance Company 3,283,189 3,718,636
Axa Corporate Solutions Reinsurance Co. 283,363 243,885
Berkley Insurance Company (1) 441,802 510,870
Berkshire Hathaway Reinsurance 1,001,536 1,120,249
Group

CNA Re 572,474 1,273,786
CNA Re * 801,615 1,826,725
Converium Reinsurance (North America), Inc. (2) 936,246 1,211,626
EMC Reinsurance Company (3) 61,887 53.579
Employers Reinsurance Corporation (4) 3,691,532 3,740,251

Enhance Financial Group (5) 54,129 9,985
Everest Reinsurance Company 1,307,180 1,066,491
Farmers Mutual Hail Insurance Company of Iowa 41,620 53,370
Folksamerica Reinsurance Company 421,486 365,007
General Re Group (6) 3,720,383 5,540,763

Gerling Global Group (7) 776,959 736,942
Hartford Re Company 851,616 972,875
Insurance Corporation of Hannover 312,341 274,893
Odyssey America Re Corp./Odyssey Re Corp. (8) 816,351 665,202
Overseas Partners US Reinsurance Company (9) 76,585 69,284

Partner Re. U.S. (10) 435,058 390,045
PMA Capital Insurance Company 298,910 260,521
PXRE Reinsurance Company (11) 85,338 86,095
QBE Reinsurance Corporation 212,694 158,769
SCOR U.S. Group (12) 719,410 751,379

St. Paul Re (13) 1,335,176 1,503,351
St. Paul Re (13) * 1,529,979 1,798,343
Swiss Reinsurance America Corporation 1,623,288 1,794,108
The Toa Reinsurance Company of America 189,275 188,509
Transatlantic/Putnam Reinsurance Co 1,664,703 1,464,022
Trenwick America Reinsurance Corporation 248,752 193,783
XL Reinsurance America, Inc. 193,289 263,557

Total Reinsurance Affiliates 3,802,422 4,923,631
Total Reinsurance Affiliates * 4,226,366 5,771,562

Total Reinsurance Companies 22,141,528 24,015,262

TOTAL RESULTS 25,943,950 28,938,893
TOTAL RESULTS * 26,367.894 29,786,824




 Loss Combined
Reinsurer Ratio Ratio

American Agricultural Insurance Company 89.5% 111.5%
American Re-Insurance Company 113.3% 148.3%
Axa Corporate Solutions Reinsurance Co. 86.1% 129.8%
Berkley Insurance Company (1) 115.6% 148.9%
Berkshire Hathaway Reinsurance 111.9% 123.8%
Group

CNA Re 222.5% 247.8%
CNA Re * 227.9% 262.8%
Converium Reinsurance (North America), Inc. (2) 129.4% 170.6%
EMC Reinsurance Company (3) 86.6% 115.7%
Employers Reinsurance Corporation (4) 101.3% 131.4%

Enhance Financial Group (5) 18.4% 62.8%
Everest Reinsurance Company 81.6% 116.3%
Farmers Mutual Hail Insurance Company of Iowa 128.2% 153.9%
Folksamerica Reinsurance Company 86.6% 119.9%
General Re Group (6) 148.9% 175.2%

Gerling Global Group (7) 94.8% 130.8%
Hartford Re Company 114.2% 143.9%
Insurance Corporation of Hannover 88.0% 113.8%
Odyssey America Re Corp./Odyssey Re Corp. (8) 81.5% 113.9%
Overseas Partners US Reinsurance Company (9) 90.5% 120.6%

Partner Re. U.S. (10) 89.7% 121.6%
PMA Capital Insurance Company 87.2% 118.5%
PXRE Reinsurance Company (11) 100.9% 129.4%
QBE Reinsurance Corporation 74.7% 107.6%
SCOR U.S. Group (12) 104.4% 131.2%

St. Paul Re (13) 112.6% 133.4%
St. Paul Re (13) * 117.5% 143.7%
Swiss Reinsurance America Corporation 110.5% 141.4%
The Toa Reinsurance Company of America 99.6% 124.8%
Transatlantic/Putnam Reinsurance Co 87.9% 116.0%
Trenwick America Reinsurance Corporation 77.9% 113.7%
XL Reinsurance America, Inc. 136,4% 161.0%

Total Reinsurance Affiliates 129.5% 150.1%
Total Reinsurance Affiliates * 136.6% 160.8%

Total Reinsurance Companies 108.5% 139.6%

TOTAL RESULTS 111.5% 141.0%
TOTAL RESULTS * 113.0% 142.9%


 Net
 Underwriting
 Gain (Loss)
Reinsurer Dec-01

American Agricultural Insurance Company (35,315)
American Re-Insurance Company (1,403,140)
Axa Corporate Solutions Reinsurance Co. (117,716)
Berkley Insurance Company (1) (214,251)
Berkshire Hathaway Reinsurance (263,039)
Group

CNA Re (839,586)
CNA Re * (1,264,343)
Converium Reinsurance (North America), Inc. (2) (621,327)
EMC Reinsurance Company (3) (10,997)
Employers Reinsurance Corporation (4) (1,163,150)

Enhance Financial Group (5) 7,468
Everest Reinsurance Company (231,145)
Farmers Mutual Hail Insurance Company of Iowa (22,438)
Folksamerica Reinsurance Company (96,347)
General Re Group (6) (2,860,833)

Gerling Global Group (7) (233,745)
Hartford Re Company (372,964)
Insurance Corporation of Hannover (52,888)
Odyssey America Re Corp./Odyssey Re Corp. (8) (138,089)
Overseas Partners US Reinsurance Company (9) (17,642)

Partner Re. U.S. (10) (114,662)
PMA Capital Insurance Company (61,086)
PXRE Reinsurance Company (11) (25.323)
QBE Reinsurance Corporation (24,026)
SCOR U.S. Group (12) (191,829)

St. Paul Re (13) (479,535)
St. Paul Re (13) * (690,542)
Swiss Reinsurance America Corporation (679,618)
The Toa Reinsurance Company of America (50,173)
Transatlantic/Putnam Reinsurance Co (294,295)
Trenwick America Reinsurance Corporation (48,226)
XL Reinsurance America, Inc. (126,523)

Total Reinsurance Affiliates (1,977,562)
Total Reinsurance Affiliates * (2,613,326)

Total Reinsurance Companies (8,804,878)

TOTAL RESULTS (10,782,440)
TOTAL RESULTS * (11,418,204)

* Results include combined U.S. and Non U.S. affiliate operations.

(1) During 2001, the company prepared a plan to discontinue its
Alternative Market Division. The after-tax loss for this business was
$97,146,678 for the year ended December 31, 2001.

(2) (Formerly Zurich Reinsurance (North America), Inc.

(3) All reinsurance issued in the name of Employers Mutual Casualty
Company.

(4) Includes the combined results of Employers Reinsurance Corporation,
Westport Insurance Corporation, First Specialty Insurance Corporation.
The Medical Protective Company, and GE Reinsurance Corporation.

(5) On February 28, 2001, Radian Group Inc. acquired Enhance Financial
Services Group Inc. The acquisition was accounted for as a purchase,
Radian provides private mortgage coverage in the United States on
residential mortgage loans. The results include Enhance Reinsurance
Company and Van- American Insurance Company, only.

(6) All data presented on a North American Consolidated statutory basis
for the General Re Group (excludes other affiliates from the Berkshire
Hathaway Group).

(7) Includes the combined results of Gerling Global Reinsurance
Corporation of America and constitution Insurance Company.

(8) Includes the combined results of Odyssey America Re Corp., Odessey
Reinsurance Corp. and Hudson Insurance Company.

(9) Underwriting results of Overseas Partners US Reinsurance Company,
for the twelve months ended December 31, 2001, have been negatively
impacted by expense associated with start-up related activity. The
company was incorporated on October 2, 2000 through the acquisition of
all outstanding stock of Reliance Reinsurance Company.

(10) Includes the combined results of Partner Reinsurance Company of the
U.S. and its subsidiary Partner Re Insurance Co. of New York.

(11) PXRE Reinsurance Company recognized a realized loss of $31.8
million in its foreign subsidiary that was previously recorded as
unrealized. On December 10, 2001, PXRE Group signed an agreement with
investors to invest $150 million in the company. The Connecticut
Insurance Department has scheduled a hearing to consider the investment
on March 13, 2002. Upon closing, PXRE expects to increase its paid up
capital by $100 million.

(12) Amounts include 12 months of SOREMA N.A. Re results; Net losses and
loss adjustment expenses incurred reflect workers compensation
discounting and loss portfolio gain.

(13) Excludes the corporate aggregate excess cover.

(14) Total premiums written shown for December 2000 are those reported
in the December 2000 Reinsurance Underwriting Report.

Source: Reinsurance Association of America (RAA)
Standard & Poor's Ratings Affected by the sept. 11 Terrorist Attacks

 Date Ratings
 Placed on
Insurer CreditWatch

ACE Sept. 24, 2001
AIOI Nov. 22, 2001

Alea Sept. 20, 2001
ALM Brand Sept. 21, 2001

 2002


ARIG Re Sept. 20, 2001

Chubb Sept. 20, 2001

CNA Oct. 10, 2001



Gerling Sept. 26, 2001

Hannover Re Sept. 20, 2001

Hartford Sept. 20, 2001
Liberty Mutual Sept. 20, 2001

Lloyd's Sept. 20, 2001



Markel Sept. 20, 2001



Partner Re Sept. 20, 2001
PMA Sept. 20, 2001
PXRE Sept 20, 2001
QBE Sept. 19, 2001



Royal & Sun Alliance Sept. 20, 2001

St. Paul Cos. Sept. 20, 2001

SCOR Sept. 20, 2001


XL. Capital Sept. 20, 2001
Zurich Financial Services Sept. 20, 2001




Insurer Resulting Rating Action

ACE Affirmed on Dec. 4, 2001
AIOI Lowered to 'A' from 'A+' on March
 12, 2002
Alea Affirmed on Nov. 2, 2001
ALM Brand Lowered to 'BBB+' from 'A-' on Oct.
 4, 2001.
 Subsequently lowered to 'BBB' on
 Feb. 28, NR
 (withdrawn on Feb. 28, 2002)
ARIG Re Lowered to 'BB+' from 'BBB+' on
 Nov. 15, 2001
Chubb Lowered to 'AA+' from 'AAA' on Nov.
 7, 2001
CNA Lowered to 'A-' from 'A' on Oct.
 10, 2001.
 Subsequently affirmed on Feb. 5,
 2002
Gerling Lowered to 'A+' from 'AA-' on Feb.
 11, 2002
Hannover Re Lowered to 'AA' from 'AA+' on Dec.
 21, 2001
Hartford Affirmed on Oct. 4, 2001
Liberty Mutual Lowered to 'A+' from 'AA-' on Dec.
 20, 2001
Lloyd's Lowered to 'A' from 'A+' on Sept.
 20, 2001.
 Ratings remain on CreditWatch
 Negative
Markel U.S. units affirmed. Markel
 International lowered
 to 'BBB-' from 'A-' on March 22,
 2002
Partner Re Affirmed on Nov. 5, 2001
PMA Affirmed on Dec. 21, 2001
PXRE Affirmed on April 5, 2002
QBE Lowered to 'A' from 'A+' on Sept.
 19, 2001.
 Subsequently raised to 'A+' on Nov.
 1, 2001
Royal & Sun Alliance Lowered to 'A+' from 'AA-' on Nov.
 13, 2001
St. Paul Cos. Lowered to 'AA-' from 'AA' on Dec.
 12, 2001
SCOR Affirmed on Dec. 19, 2001.
 subsequently lowered
 to 'A+' from 'AA-' on Jan. 15, 2002
XL. Capital Affirmed on Dec. 20, 2001
Zurich Financial Services Lowered to 'AA-' from 'AA' on Feb.
 15, 2002



Insurer Rating as of April 11, 2002

ACE A+
AIOI A

Alea A-
ALM Brand




ARIG Re NR (withdrawn Dec. 11, 2001)

Chubb AA+

CNA

 A-

Gerling A+

Hannover Re AA

Hartford AA
Liberty Mutual A+

Lloyd's

 A/WatchNeg

Markel

 A- (U.S.); BBB-
 (international)
Partner Re AA
PMA A
PXRE A
QBE

 A+

Royal & Sun Alliance A+

St. Paul Cos. AA-

SCOR

 A+
XL. Capital AA
Zurich Financial Services AA-


Source: Standard & Poor's, New York


Patricia Vowinkel can be reached at pattivo@blast.net.
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Date:Jun 1, 2002
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