For European non-life insurers, 2004 will bring positive opportunities, said Swiss Re in its annual Insurance review and outlook. It said this followed an increase in premium volume and substantial improvements in rates during the current year.
Swiss Re'chief economist Thomas Hess commented that non-life premium volume continued to increase in 2003, following strong growth during 2002.
"In 2003 the non-life sector benefited from substantial improvements in rates, particularly in industrial lines business," said Hess.
He also identified several factors which had weakened insurers' financial performances during 2003.
"To a large extent, the price increases achieved this year served to compensate for previous under-pricing. Many insurers also appear to have under-reserved their liability business in the second half of the 1990s.
A further reason for the lacklustre results is that accounting rules in some countries permit capital losses to be deferred," said Hess.
He said he expected these negative effects to be less pronounced during 2004, allowing a larger proportion of 2003's positive underwriting developments to show up in insurer's results.
Hess also predicted further improvements for the industry over the coming year, in both underwriting and investment results.
