€ 1,086.5 million 95.0% 34.9% € –92.8 million € 2,051.6 million
€ 1,073.8 million 84.0% 29.6% € –19.6 million € 1,961.1 million
Gerling Global Reinsurance Corporation of America (GGRCA New York), New York
Gross premiums Loss ratio (net)* Cost ratio (net) Loss after tax Investments
benefit and claim payments in relation to earned premiums
Competition in the US reinsurance market continued unabated in 2001 until a marked upturn in rates occurred in September. In this environ- ment, the US reinsurer registered a marginal downturn in premium income in dollars. Translated into euros, this amounted to moderate premium growth.
The profitability problems that have marked the US reinsurance market assumed dramatic proportions with the occurrence of the worst-ever insurance catastrophe of human design on 11 September 2001. Owing to retrocession arrangements, including arrangements with the parent company, the net cost ratio rose to 34.9% (p.y. 29.6%). Gross costs remained largely unchanged. After assignment of loss to other Gerling Global Re Group companies, these circumstances led to a loss after tax of € 92.8 million.
In the meantime, the new management of GGRCA has taken important remedial action. The company has withdrawn from Credit and Bond business, for example, and no longer writes primary insurance business through its subsidiary Constitution Insurance Company (CIC), New York. The portfolio now is more heavily biased towards excess of loss business, the aim being to put business in the underwriting years ahead on a more profitable footing.
€ 166.4 million was added to the capital base of GGRCA by means of restructuring of business units and a parental cash contribution aimed at capitalizing the subsidiary for life in a tough insurance market.