A number of insurers have begun to release their financial results for Q4 2010. The following is a compilation of their announcements:
Arch Capital Group Ltd. reports that net income available to common shareholders for the 2010 fourth quarter was $227.7 million, or $4.54 per share, compared to $284.7 million, or $4.75 per share, for the 2009 fourth quarter. The company also reported after-tax operating income available to common shareholders of $129.5 million, or $2.58 per share, for the 2010 fourth quarter, compared to $159.4 million, or $2.66 per share, for the 2009 fourth quarter. All earnings-per-share amounts are on a diluted basis.
Arch Capital's book value per common share was $89.98 at Dec. 31, 2010, a 0.8% increase from $89.24 per share at Sept. 30, 2010 and a 23.2% increase from $73.01 per share at Dec. 31, 2009. The company's after-tax operating income available to common shareholders represented a 12.1% annualized return on average common equity for the 2010 fourth quarter, compared to 15.7% for the 2009 fourth quarter.
In the 2010 fourth quarter, the company recorded net losses for the Australian floods that occurred in December 2010 of approximately $22.5 million, or $0.45 per share, net of reinsurance and reinstatement premiums. Subsequent Australian flooding, and Cyclone Yasi that occurred in Australia in 2011, will impact the company’s 2011 first-quarter results. Although it is early in the estimation process, the company's preliminary estimate of losses for the 2011 first quarter events is in the range of $30 million to $60 million, net of reinsurance and reinstatement premiums. The company's estimates for the 2010 and 2011 Australian floods are based, in part, on preliminary estimates of industry insured losses ranging from $3.0 billion to $6.0 billion, and the company's estimates for Cyclone Yasi are based, in part, on preliminary estimates of industry insured losses ranging from $0.5 billion to $1.5 billion.
AXA Group recently issued its full year 2010 earning statement. According to the release, Chairman and CEO Henri de Castries issued the following statements:
"In 2010, despite an environment which remained challenging throughout the year, AXA delivered a solid set of results with a strong improvement in new business profitability, a rebound in adjusted earnings and an increase in operating free cash flows. On this basis, AXA's Board of directors will propose a 25% increase in dividend to shareholders."
"2010 was also characterized by significant strategic moves and organizational changes. I would emphasize in particular our decisive developments in high growth markets, the partial sale of our life operations in the UK, the ramp up of our new organization by business line and the changes in our senior management teams.
"In 2011, AXA should benefit from an improving macro-economic outlook. In this context, our main business objectives will be to accelerate profitable growth and deliver productivity gains across business lines to support value creation and the improvement of group operating free cash flows, while successfully pursuing the reallocation of our capital towards growth oriented geographies or business segments."
Eastern Insurance Holdings Inc. (EIHI) reported earnings for the three months ended Dec. 31, 2010. EIHI reported a net loss of $11.8 million, or $1.37 per diluted share, for the fourth quarter of 2010, compared to net income of $2.7 million, or $0.29 per diluted share, for the same period in 2009. Included in the net loss for the three months ended Dec. 31, 2010 is an after-tax loss on the sale of Eastern Atlantic RE of $14.5 million, or $1.68 per diluted share.
EIHI's net income from continuing operations was $538,000, or $0.06 per diluted share, for Q4 2010 compared to net income from continuing operations of $1.6 million, or $0.18 per diluted share, for the same period in 2009. EIHI's diluted book value per share was $14.88 as of Dec. 31, 2010, compared to $15.78 as of Dec. 31, 2009.
"Despite the occurrence of an unusual amount of severity-related claims in the fourth quarter of 2010 in our Mid-Atlantic region, our workers' compensation insurance segment posted solid results for the year ended Dec. 31, 2010," Bruce Eckert, vice chairman, said in a statement. "Our combined ratio for the year ended Dec. 31, 2010, was 96.0%, including a fourth quarter combined ratio of 103.4%.
“During the fourth quarter of 2010, we experienced three claims greater than our $500,000 reinsurance retention compared to no such claims for the same period in 2009 and also had an unusual amount of claims just under the reinsurance retention in the quarter,” he added. “This unusual claim activity came exclusively from our Mid-Atlantic book of business on accounts that met our underwriting standards and that have been profitably underwritten for years.
“The combined ratios for the year ended Dec. 31, 2010 in our Southeast and Midwest regions were 84.4% and 92.6%, respectively. I was very pleased with our overall year over year growth in direct written premium of 14.6%, premium renewal retention of 87.0% and renewal rate decreases of only 1.9% in this very competitive marketplace. December 2010 was the first month since 2005 that we experienced pure net rate increases on our renewal book of business and I am hopeful that this and stabilizing employers' payrolls are positive signs for our workers' compensation insurance segment prospectively."
Global Indemnity plc issued a statement regarding its Q4 results. According to the report, the company's net income excluding the impact of its previously disclosed Profitability Enhancement Initiative for the three months ended Dec. 31, 2010 of $26.8 million or $0.88 per share ($21.7 million including the Profitability Enhancement Initiative charges or $0.72 per share) and for the twelve months of $90.0 million or $2.97 per share ($84.9 million including the Profitability Enhancement Initiative charges or $2.80 per share).
As of December 31, book value per share increased to $30.59 or 11.3% from $27.48 per share at Dec. 31, 2009.
"While continuing to experience the prolonged 'soft' property/casualty market, the company succeeded in growing book value by 11.3% over the course of 2010," Larry Frakes, president & CEO said in a statement. "The company also generated a modest increase in premiums; its first increase in premiums of any amount since 2006.
"The company's operating results were achieved while adhering to disciplined pricing practices and core underwriting guidelines as well as maintaining a relatively short duration fixed income portfolio enhanced by increased investments in floating rate commercial loans and common stocks," Frakes continued. "Finally, as previously announced, in December 2010, the company incurred a one-time after-tax charge of $5.1 million to fund its Profit Enhancement Initiative that is expected to increase annual pretax earnings in 2011 by approximately $10.8 million and $0.29 per share."
Infinity Property and Casualty Corp. reported results for the three and 12 months ended Dec. 31, 2010. Gross written premium grew 8.9% during Q4 2010 compared with the same period in 2009 with growth in seven of the eight focus states.
Net and operating earnings declined in Q4 2010 as compared with the same period in 2009 primarily as a result of a greater amount of favorable development on prior accident year loss and loss adjustment expense reserves recognized in Q4 2009. Favorable development recognized in earnings during the fourth quarter of 2010 was $20.1 million, pre-tax ($1.02 per diluted share after-tax) and resulted primarily from bodily injury coverages in California as well as the commercial vehicle product related to accident years 2009 and 2008. Favorable development recognized in Q4 2009 was $32.0 million, pre-tax ($1.52 per diluted share after-tax).
Favorable development for the twelve months ended Dec. 31, 2010 was $73.9 million, pre-tax ($3.65 per diluted share after-tax) and resulted primarily from bodily injury coverages in California, Connecticut, Florida, Pennsylvania as well as the commercial vehicle product related to accident years 2009, 2008 and 2007. Favorable development for the twelve months ended Dec. 31, 2009 was $65.4 million, pre-tax ($3.06 per diluted share after-tax).
Contributing to the increase in net earnings for the twelve months ended Dec. 31, 2010 compared with the same period of the prior year was an increase in net realized gains on investments. Infinity had $10.4 million of net realized gains for the twelve months ended Dec. 31, 2010 compared with a net realized loss of $14.8 million for the twelve months ended Dec. 31, 2009.
ING recently reported its Q4 results. In the final quarter of 2010, the Dutch insurer posted a 2010 underlying net profit of EUR 3,893 million. According to a statement, ING's full-year underlying net profit rose fourfold to EUR 3,893 million from EUR 974 million in 2009.
ING also reported the following results:
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“ING made good progress in 2010 as we prepare to create strong stand-alone companies for banking and insurance,” Jan Hommen, CEO of ING Group, said in a statement. “Although the economic recovery remains fragile, and financial markets continue to be volatile, ING posted an underlying net profit of EUR 3,893 million in 2010, up from EUR 974 million a year earlier. The Bank made a strong recovery, boosting the return on IFRS equity to 13.1% and generating EUR 5.9 billion of core Tier 1 capital. Insurance is also showing early progress on its performance improvement program, despite challenging market circumstances. The operational separation of the Bank and Insurer was completed at year-end, with arms-length agreements in place between the two businesses for all commercial cooperation and shared infrastructure. The focus for 2011 will be on preparing the Insurance company for two IPOs and working towards the repurchase of the remaining outstanding core Tier 1 securities from the Dutch State.
“Insurance continued to show progress toward its Ambition 2013 performance improvement objectives," he continued. "Operating profit for Insurance was up 44.6% to EUR 438 million, supported by a continued improvement in the investment spread to 93 basis points, as well as higher fees driven by new sales and growth in assets under management. The underlying result before tax was impacted by the write-down of EUR 975 million of deferred acquisition costs as part of the measures announced in the third quarter to improve transparency and address the reserve adequacy of the closed block variable annuity business in the U.S.”
“The measures taken to address the U.S. variable annuity block and the decision to bring the US reporting more into line with US peers should reduce earnings volatility from the U.S. Closed Block VA going forward," Hommen said. "The DAC balance for the closed block has been reduced substantially and reserve adequacy has been bolstered with a significant buffer above the 50% confidence level. As we prepare for our base case of two IPOs for Insurance, our priorities for 2011 will be the legal and operational separation within the Insurance business, and delivery on the performance improvement plans so we will be ready to move forward with the IPOs when market conditions are favorable.”
Manulife Financial Corp. (MFC) issued a statement in which it reported progress in its business strategy of building sales growth in targeted areas and reducing equity market and interest rate sensitivity during the fourth quarter ended Dec. 31, 2010. The company also reported strong capital levels and a record quarterly net income.
Net income attributed to shareholders was $1,794 million for the fourth quarter ended Dec. 31, 2010. This equates to fully diluted earnings per share of $1 and return on common shareholders' equity of 29%. For the fourth quarter of 2009, MFC reported net income attributed to shareholders of $868 million or $0.51 per share and return on common shareholders' equity of 13%.
Higher equity markets and the increase in interest rates were significant contributors to the record level of earnings in the quarter. Gains related to equity markets were $441 million, while interest rate gains were $604 million.
"We have made significant progress on our strategic goals. We are diversifying our businesses and reducing our sensitivities to equity markets and interest rates, while strengthening our capital position," CEO Donald Guloien said in a statement.
"We had strong growth in Asia, diversification in Canada and continued progress in the strategic repositioning in the U.S.,” Guloien added. “We are proud of our continuing expansion and growing sales levels across Asia as a whole. In North America, our full year deposits for Canadian Mutual Funds almost tripled 2009 levels and U.S. Wealth reached a record level of assets under management."
Q4 net income attributed to shareholders was $1,794 million. Reported net income benefitted from $861 million in equity market and interest rate direct impacts, which if excluded, would result in net income of $933 million. There were a number of other notable items in the quarter, which provided an additional benefit of $241 million and, when deducted, resulted in adjusted earnings from operations of $692 million.
Marsh & McLennan Cos. Inc. reported financial results for the fourth quarter and year ended Dec. 31, 2010.
Consolidated revenue in Q4 2010 was $2.8 billion, an increase of 9% from Q4 2009, or 6% on an underlying basis. Underlying revenue measures the change in revenue before the impact of acquisitions and dispositions, using consistent currency exchange rates. For 2010, consolidated revenue was $10.6 billion, an increase of 7% from $9.8 billion in 2009, or 3% on an underlying basis.
In the fourth quarter of 2010, net income rose to $203 million, or $.37 per share, compared with net income of $23 million, or $.04 per share, in 2009. Earnings per share on an adjusted basis, which excludes noteworthy items as presented in the attached supplemental schedules, increased 8% to $.41, compared with $.38. Adjusted operating income in the fourth quarter rose 22% to $379 million compared with prior year.
For the full year, net income increased to $855 million from $227 million in 2009, and earnings per share increased to $1.55 from $.42 in the prior year. Adjusted earnings per share increased to $1.64. Adjusted operating income grew 14% to $1.5 billion for 2010.
"We are very pleased with our company's performance,” President and CEO Brian Duperreault said in a statement. “We achieved growth in both revenue and operating income in every one of our four operating companies, not only in the quarter; but for the full year.
"Marsh's strong fourth quarter results capped a year of excellent performance,” he added. “Robust new business development contributed to underlying revenue growth across all geographies. Guy Carpenter also had a very successful year. Both underlying revenue and profitability increased, supported by continued new business development.
"The success we achieved in 2010 gives us a solid foundation on which to build. With excellent operating company leadership, continued expense discipline, and the commitment to achieve strong earnings growth, we are well-positioned for the future," Duperreault concluded.
Meadowbrook Insurance Group Inc. reported that net operating income for the year ended Dec. 31, 2010 increased 8.8% to $58.2 million, or $1.07 per diluted share, up from $53.5 million, or $0.93 per diluted share, for the comparable prior year period. Net income increased 13.4% to $59.7 million, or $1.10 per diluted share, compared to $52.7 million, or $0.92 per diluted share, in 2009.
According to the statement, Meadowbrook's 2010 results include $1.5 million, or $0.03 per diluted share, of net after-tax realized gains, whereas 2009 results include ($865,000), or ($0.01) per diluted share, of after-tax realized losses.
Meadowbrook's gross written premium increased 16.4% to $801.9 million in 2010, compared to $688.7 million in the comparable prior year period. The increase in premium is primarily due to new business initiatives commencing in the second half of 2009.
For the year ended Dec. 31, 2010, net earned premium increased 22.3% to $659.8 million, compared to $539.6 million in 2009, while the year-to-date GAAP combined ratio for 2010 was 95.0%, compared to 93.2% for the comparable period in 2009.
"We are pleased with our results as we continue to achieve profitable growth in a competitive market," Meadowbrook President and CEO Robert Cubbin said in the statement. "Our growth strategy has been to develop specialty niche expertise in a range of select areas. Through this approach we have developed a book of business that is broadly diversified by line of business, customer base and geography. We believe this diversity reduces our risk profile and enables us to generally deliver more predictable results. Our focus on pricing adequacy and disciplined underwriting has resulted in a significant increase to net operating income as compared to the prior year."
Sun Life Financial Inc. issued a statement that reported a net income of $508 million for Q4 2010, compared with net income of $296 million in the same period last year. Diluted earnings per share ("EPS") were $0.88 in Q4 2010 compared to $0.52 in Q4 2009.
Strong financial markets resulted in higher earnings in Q4. Improvements in equity markets and increased interest rates were the main drivers of higher earnings in Q4. This was partially offset by the impact of changes to actuarial estimates and assumptions related primarily to mortality, and higher levels of expenses, which included several non-recurring items. Credit experience continued to show improvement over the prior year.
Sun Life said that earnings for the full year in 2010 were $1,583 million, compared with net income of $534 million in 2009. Full year 2010 earnings reflected improvements in equity markets, the favorable impact of the purchase of the United Kingdom operations of Lincoln National Corp. ("Lincoln U.K. acquisition") and the favorable impact of asset liability re-balancing. This was partially offset by increased expense levels from business initiatives in 2010.
Net income attributable to common shareholders was $508 million for the quarter ended Dec. 31, 2010, compared to net income of $296 million in Q4 2009. Net income in Q4 2010 was favorably impacted by $181 million from improvements in equity markets and $113 million from increased interest rates. This was partially offset by the impact of management actions and changes to actuarial estimates and assumptions of $58 million related primarily to mortality, higher levels of expenses, which included several non-recurring items, and the unfavorable impact of currency movements.
Results in Q4 2009 benefited from the positive impact of asset-liability re-balancing, improvements in equity markets, increased interest rates and an overall tax recovery. These impacts were partially offset by net impairments, downgrades on the investment portfolio and lower asset reinvestment gains from changes in credit spreads.
Return on equity (ROE) for Q4 2010 was 12.4%, compared with 7.6% for Q4 2009. The increase in ROE was primarily the result of higher earnings, which increased to $0.88 per share in Q4 2010 from $0.52 per share in Q4 2009.
"Our results in the fourth quarter and for the full year of 2010 reflect strong performance," Donald Stewart, CEO, said in a statement. "Throughout 2010 we remained focused on investing in our businesses, deploying capital effectively and enhancing our strong risk management practices. Our dedicated focus in 2010 is reflected in the continued momentum, strong execution and solid results of our businesses."
Swiss Re reported its results for 2010, which the company says reflect the sustained earnings power of its business and the strength of its client franchise. According to a statement, the company achieved full-year net income of USD 863 million and earnings per share of USD 2.52. Swiss Re says it plans to establish a new corporate structure under a newly formed holding company, which should increase its client focus, thereby improving the transparency and accountability of its businesses and create greater flexibility.
Excluding the impact of the CPCI termination, Swiss Re's net income for 2010 was USD 2.3 billion. The return on equity excluding the CPCI was 9.2%. The CPCI was terminated in November 2010 and repaid in January 2011. Including the impact of the CPCI termination, Swiss Re achieved in 2010:
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Swiss Re's P&C segment delivered strong results due to disciplined underwriting and despite a high level of natural catastrophe losses, the company says. Operating income was USD 2.5 billion, down 30% due to the higher large loss experience and lower net investment income. The combined ratio was 93.9%, compared to 88.3% in 2009. The impact of natural catastrophes was 3.0 percentage points above the expected level and was partially compensated by 0.8 percentage points from positive run-off. Swiss Re estimates claims, net of the benefits of retrocession and before tax, relating to the Queensland, Australia flooding for the fourth quarter of 2010 of USD 100 million. The company’s preliminary estimate of claims from the floods in Q1 2011 is USD 225 million. Swiss Re also estimates that claims from the Australian cyclone Yasi will be approximately USD 100 million. Both of these estimates are net of the benefits of retrocession and before tax. Significant uncertainties are involved in estimating losses from such an event and this preliminary estimate may need to be adjusted as new information becomes available.
Swiss Re's life & health segment reported results with a significant improvement in operating performance. Operating income was USD 810 million, an increase of 18%. The benefit ratio increased 4.9 percentage points to 88.7%. Excluding the 2009 benefit derived from the rescission of a disability contract, together with the impact of certain commutations, the benefit ratio increased 3.0 percentage points. Mortality experience was better than expected, although less favorable than the results recorded in the prior year. Morbidity was within expectations for both periods.
“Over the past two years we have come a long way,” Stefan Lippe, CEO, said in a statement. “Swiss Re has strengthened its balance sheet, set new strategic priorities and aligned its management structure. The company is now taking the next step in shaping the company's future by adjusting its legal structure to reinforce its strategic priorities and allow it to fully unlock the potential of its business.”
