H1 2011 Results and repetition

The first half financial reporting season is upon us and as always it will be a challenge for reporters to make the story behind each firm’s numbers sound different.

This is because as certain major themes make an impact across the board the results of one company can appear almost interchangeable with other similar underwriters and sometimes it appears that only the names and exact figures differ.

This reporting season the key phrases to watch out for will be ‘major claims’, ‘first half catastrophes’, ‘soft market conditions’ and ‘North Atlantic hurricane season’.

For those with a firm eye on the bottom line the key expression will likely be either ‘fell to a loss’ or ‘profits down’.

Amongst the early reporters in the London Market were Brit Insurance and The Insurance Insider noted that the company “reported a first-half net profit of £6.8mn, down from £77.5mn in H1 2010, in the firm’s first results posted under new private equity owners Apollo and CVC”.

Things were worse over at Beazley, its $24.2mn half-year loss getting “a mixed reception from analysts… as the company reported a 108 percent combined ratio on major disaster losses of $183mn”, according to The Insurance Insider.

The publication also reported that Hardy – which has yet to post its results – had “increased its loss estimates for the Q1 natural catastrophes after receiving new information from ceding companies”.

And had “bought more reinsurance in preparation for the North Atlantic hurricane season”.

On the bright side for (re)insurers the company also reported that it had achieved rate rises of 4.1% across its portfolio during the renewals that have taken place in 2011, so it looks as if the market cycle may be beginning to turn.

Things in Europe and Bermuda took a similar turn as Business Insurance reported that “ACE Ltd. and RenaissanceRe Holdings Ltd. had weaker earnings between January and June, and PartnerRe Ltd. announced its losses related to recent events”.

ACE’s earnings may have been more than respectable at $866mn in the first half of the year, but that’s down from $1.43 billion during the same period in 2010.

In fact BI was being kind to RenRe, which had made a Q2 profit of $24.8mn, compared with a profit of $210.2mn last year, but this was overshadowed by a loss of $223.3mn during the first half of this year.

BI reported: “Tornadoes in the U.S. caused RenRe $70.8mn of losses in the second quarter. The company estimated in April that it also lost $328.6mn from the March 11 earthquake and tsunami in Japan, $197.1mn from the New Zealand earthquake, and $39.6mn from Australian floods.”

PartnerRe’s loss from US tornadoes in April and May are estimated at $89mn in losses while it also increased its previous loss estimate for the New Zealand earthquake to $59mn.

Elsewhere, Arch Capital reported a first-half profit of $111.2mn, down 75.2% from $447.5mn for the first half of 2010.

It will be interesting to see how many more companies follow these patterns and which terms the press use to describe the results as they come in. I may even make myself a bingo card with some of the favourites and play as I read.

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