The Results Are In

The Reinsurance Association of America has released the underwriting results for a group of 19 U.S. property/casualty reinsurers for the first nine months of 2009. On the whole, the numbers look pretty good: Even though the group wrote $278 million less in net premiums compared to last year ($18.7 billion versus $19.0 billion), what they wrote was more profitable. The group’s combined expense and loss ratio was 95.1% this year, down from the profit-crushing 104.2% combined ratio reported for the same period of time in 2008.

(Combined ratio essentially is how much it costs to make a buck. If your combined ratio is below 100%, you are making money on underwriting. If it is over 100% – which happens a lot with insurers – then you are losing money, mostly because your claims are outstripping your premiums.)

Ultimately, the companies that posted the largest net incomes were:

  • Swiss Reinsurance America Corporation ($582.9 million)
  • Everest Reinsurance Company ($271.0 million)
  • TRC/Putnam Reinsurance Company ($270.0 million)
  • Odyssey America Re/Odyssey Reinsurance ($219.5 million)

Conversely, the companies posting the worst negative incomes were:

  • National Indemnity Company (-$291.9 million)
  • Munich Re America Corp. (-$56.9 million)
  • American Agricultural Insurance Company (-$50.9 million)
  • QBE Reinsurance Group (-$16.8 million)

On average the entire group did rather well, posting a total net income of $1.3 billion and a total policyholder’s surplus of $74.1 billion, up $2 billion from this time last year.

These numbers shouldn’t be all that surprising, though. According to Guy Carpenter back in April, P/C reinsurers had tightened their rates during the 4/1 renewal season, with national programs rising between 10% and 14% on a risk-adjusted basis. Regional pricing also played a factor; the Northeastern U.S., for example, only saw about a 6% to 8% increase. The price jumps merely extended a rising cost of reinsurance that had already begun by January 1.

Meanwhile, the industry has also had a fairly light catastrophe year. Natural and man-made catastrophes cost insurers about $24 billion this year, compared to the $50 billion they cost last year. While Europe had an above-average year for cat losses (especially natural catastrophes), the calm hurricane season in the U.S. more than balanced things out in favor of reinsurers. This leaves the market well capitalized for whatever 2010 has in store. Hopefully it will be another quiet year, though reinsurance buyers are unlikely to endure additional price increases with a smile at the rate things are going.

The Annals of Thanksgiving Risks

For those of you unlucky enough to be reading this from your workplace today, I applaud you. Many in the workforce are already in Thanksgiving celebration mode, but I felt it was necessary to come in and inform you of some serious and not-so-serious Thanksgiving risks. Whether you like it or not.

  • A common mistake during Thanksgiving preparations is people believing they can cook. Regular Joe’s turn into suburban Tom Colicchio’s and many times, this brings about two major risks: fire and more fire. Fire not only from one’s oven or stovetop, but also from the ol’ deep fryer. In recent years deep frying a turkey has spread in popularity from the Southern United States to other regions and with that, the number of calls the fire department responds to and the number of trips to the emergency room has increased exponentially. The following shows a family of geniuses deep frying their turkey on a wooden deck and using water to extinguish a grease fire instead of simply turning off the propane.

  • Speaking of turkey, another Thanksgiving risk includes excessive overeating. Some reports even claim that one day of turkey, stuffing and continuous snacking can amount to 3,000 to 4,500 calories. That’s a lot, considering you didn’t jog on over to the festivities at Uncle Gary’s house, 13 miles away.
  • And what goes better with overeating than excessive drinking? Let’s not forget to add alcohol calories to those glutinous food calories. Upon researching this, I was horrified to find out that one glass of red wine amounts to approximately 95 calories. Great.
  • On a more serious note, alcohol-related accidents soar during the Thanksgiving holiday. According to the National Safety Commission, Thanksgiving is the most traveled holiday period of the year with almost 90% of those traveling doing so by car. During the 2008 Wednesday-through-Sunday holiday time period, 389 occupants of passenger vehicles were killed in car crashes while thousands more were injured.
  • Finally, let us not forget the risk of the all-too-popular family feud. When you combine the stress of the holidays with deadly grease fires, aunt Nancy’s loudmouthed boyfriend, your brother’s temper-tantrum-prone three-year-old, 15 other people (half of which you haven’t seen since last Thanksgiving) and enormous amounts of food and alcohol, there’s bound to be an entertaining argument or two. And if you’re lucky enough, grandma will have one too many hot toddy’s and tell you all how she really feels.

Thanksgiving . . . high risk, high reward.

More Headaches for the NFL

In recent months, the concern about concussions and their long-term effects among NFL players has gained widespread attention. In the past month alone, two high-profile players — running backs Clinton Portis of the Washington Redskins and Brian Westbrook of the Philadelphia Eagles — have sustained concussions that have put their seasons in jeopardy. Meanwhile, in a hearing before the House Judiciary Committee last month, NFL Commissioner Roger Goodell defended the league’s policies amid heated criticism and accusations that the league has failed to protect and care for its players.

“I have been clear: medical considerations must always come first,” Goodell said. “We are changing the culture of our game for the better. Our goal is to make our game as safe as possible for those who choose to play it and treat our retired players with the respect and care they deserve.”

But after a weekend that saw both starting quarterbacks from last year’s Super Bowl — Ben Roethlisberger of the Pittsburgh Steelers and Kurt Warner of the Arizona Cardinals — leave their games early after suffering blows to the head and three members of the St. Louis Rams — quarterback Marc Bulger, linebacker Chris Chamberlain and offensive tackle Jason Smith — forced to undergo tests for possible concussions of their own, the NFL has decided to implement a new approach to handling concussions.

According to the plan, teams will be required to use independent neurologists to treat players with brain injuries. While teams already employ their own medical staff, outside consultation will eliminate potential of conflicts of interest from team owners and coaches who want injured players to return to the field more quickly than is medically advisable. While no deadline for implementation has been put in place, about half of the league’s 32 teams have approved doctors in place already.

But the independent, objective aspect of this is the key change.

These newly appointed neurologists would be “independent of the teams themselves, and they’re rendering an opinion that is guided by expertise in concussions,” the NFLPA’s Mayer said. “They’re not part of the club medical staff, so they’re an independent voice with regard to whether the player’s ready to return or not.”

The league has also called for other players to report teammates who they suspect are suffering from concussion symptoms but the players’ union opposes the requirement.

“If every player were a medical doctor that could recognize symptoms of concussions, then that would be a great idea,” said NFL Players Association assistant executive director George Atallah. “I hope that the league — instead of asking players to police each other — would consider calling on team medical staffs and independent doctors to police the situation closely.”

Some players, like Washington Redskins fullback Mike Sellers have even gone so far as to characterize players who report teammates as “snitches,” which speaks to a larger cultural problem among NFL players. Evidently in a game that values “toughness,” acknowledging an injury of any kind is frowned upon. According to an Associated Press survey of 160 current players, 30 report having hidden concussion symptoms from team personnel and half reported having at least one concussion during their career.

So it would seem that the NFL’s fight against brain injury will not only require a change in policy but a change in attitude as well.

For more on the NFL and concussions, check out the December issue of Risk Management, coming soon.

football helmet

RiskCast: Episode 2

The editors of Risk Management gathered again to discuss all of the week’s interesting risk management stories. From an armored car heist in France, to the movie industry’s archaic business plan, to relentless Somali pirates, to Walmart’s risk management plan for Black Friday — it’s all here in our second installment of the entertaining and informative RiskCast.

And, remember, you can also subscribe to the RiskCast through iTunes by clicking this link or just going to the iTunes Store and searching RiskCast. Please let us know what you think by ranking us or giving us a review on iTunes.


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