Total U.S. ordinary reinsurance assumed fell sharply in 2005, down over 51% compared with 2004, driven by a decline in recurring reinsurance, according to a just-released survey.
The annual survey, prepared by Munich American Reassurance Co., Atlanta, at the request of the Society of Actuaries, Schaumburg, Ill., reflects contributed data from reinsurers.
The survey shows that at 22 participating companies, U.S. ordinary reinsurance assumed declined to $925 billion in 2005 compared with $1.9 trillion in 2004.
Contributing to this decline was a large drop in both recurring and portfolio reinsurance. Recurring reinsurance declined to $843.7 billion in 2005 from $1.037 trillion in 2004. Portfolio reinsurance dropped to $38.7 billion in 2005 from $831.7 billion in 2004. Recurring reinsurance is issued in the same year as it is reinsured, while portfolio reinsurance is issued prior to the year it is reinsured.
The decline in recurring reinsurance is largely due to several factors that include repricing by top reinsurers and efforts of large term writers to pass on risk outside of the traditional reinsurance market, says Dave Bruggeman, an assistant vice president and actuary with MARC.
The reason that portfolio reinsurance declined is less clear, but it is possible there were just not as many portfolio reinsurance opportunities in 2005 as there were the previous year, Bruggeman says.
U.S. group reinsurance assumed also declined, dropping 24.49% to $41.1 billion in 2005 compared with $54.4 billion in 2004, according to the MARC survey.
New group business declined to $36.1 billion in 2005 from $47.7 billion in 2004, the survey reveals.