Strength, value
& opportunity

2018 ANNUAL REVIEW

“WE ARE AS READY AS EVER TO DELIVER OUR VALUE PROPOSITION, AND WE ARE GRATEFUL FOR THE PRIVILEGE TO BE PART OF YOUR SOLUTION.”

“WE ARE AS READY AS EVER TO DELIVER OUR VALUE PROPOSITION, AND WE ARE GRATEFUL FOR THE PRIVILEGE TO BE PART OF YOUR SOLUTION."

Charlie Shamieh
Chairman,
General Re Corporation
Kara Raiguel
President & CEO,
General Re Corporation
Charlie Shamieh
Chairman,
General Re Corporation
Kara Raiguel
President & CEO,
General Re Corporation

Through the ups and downs of industry cycles, through good years and bad years – almost 100 years of underwriting experience at Gen Re (and 175 years for the historical Cologne Re) – Gen Re’s single most important criterion for sustained success is the value we bring to our clients. In our business, our value proposition is tested in times of great challenges and uncertainties. If companies can’t show their strength when times are tough, what’s the value of their protection during the good times?

For the past few years, our focus has been to be a broader, more meaningful partner without losing ground in efficiency or underwriting integrity. In 2018 we started to see some real traction resulting from our efforts. We grew in almost every product line, in every part of the world and in a very challenging market environment. We ended the year with a combined ratio of 97.9% – a minimal underwriting profit, but a profit nonetheless. We achieved these metrics even though our industry is undergoing considerable challenges and uncertainty.

In Property/Casualty, only two years ago our industry was happily looking back on a decade of reserve releases that resulted from the hard casualty market of the mid-2000s, which coincided with a remarkably benign era of Cat activity. That all gave rise to some stellar results and excess capital for the entire industry. However, in 2017 and 2018 the industry was plagued by the exact opposite phenomena: On top of the dwindling reserve redundancies masking current profitability challenges, there was extensive U.S. natural catastrophe activity. And what a difference it was: Florence, Michael, unprecedented loss development on Hurricane Irma, and two years of California wildfire activity that surprised everyone with far-reaching frequency, severity and aggregation effects.

These events tend to catch even seasoned underwriters off guard and potentially call into question the sophisticated models whose predictability many hold dear. The result is that loss costs are changing in most Property/Casualty lines – so much so that we find ourselves in a time of flux between the demand and supply curves in reinsurance. For the insurance industry, 2018 was a second, consecutive game-changing year, and it is no longer easy to determine where those curves intersect. That makes both buyers and sellers unsure – and uneasy.

It is not like uncertainty is limited to the Property/Casualty side of the industry. The Life/Health sector is also facing a rapidly-changing environment as new regulatory and accounting standards across the globe are increasing the complexity of doing business. In a number of mature markets, we observe deteriorating mortality and morbidity.

Last but not least, around the world the industry is striving to adapt to changing customer behavior, including the customer’s underwriting experience and overall engagement with their primary insurer.

All this uncertainty gives Gen Re its sweet spot for demonstrating its value proposition. Our excess of $13 billion of capital and our patient owners at Berkshire Hathaway give us the room and the opportunity to make an even bigger difference to our clients. Our balance sheet, our underwriting and claims experience, our direct relationships with our partners – these are all the strengths we bring to the table when you have problems that need solutions. And our streamlined structure affords us even greater efficiency in hearing you, responding to you, and helping to absorb volatility for you.

We are energized and excited about continuing our conversations with you as the market continues to evolve, regardless of what tomorrow brings. We are as ready as ever to deliver our value proposition, and we are grateful for the privilege to be part of your solution. Thank you for the opportunity.

charlie-kara-sigs-2018

The insurance industry continues to experience an unprecedented rate of change. As products evolve and insurance carriers adapt to changing customer demands, our close client relationships become even more important.

As a direct reinsurer, we can have continuing and meaningful dialogue on the topics that are most important to you.

Here are just a few examples of some of the many issues we’ve explored recently. As always, we welcome the opportunity to engage in conversation about any specific challenges that you face in this fast-moving business environment.

MEDICAL UNDERWRITING

Read story

BEHAVIORAL ECONOMICS

Read story

PERSONAL AUTO

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General Re Corporation  |  Fiscal Year 2018  |  Unaudited*

FINANCIAL HIGHLIGHTS

29,337

TOTAL INVESTMENTS

41,221

TOTAL ASSETS

22,803

UNDERWRITING RESERVES

13,350

SHAREHOLDER'S EQUITY

8,714

NET PREMIUMS WRITTEN

97.9 %

COMBINED RATIO

*Amounts in millions of U.S. dollars.

Underwriting balances exclude the impact of intercompany loss portfolio and quota share retrocessional agreements between General Re Corporation and Berkshire Hathaway affiliates.

Realized gains/losses in 2018 include $2,046 of unrealized losses on equity securities, under new US GAAP requirements introduced last year.  Comparative amounts were not restated. Unrealized gains on equity securities of $1,119 in 2017 were reported within shareholder’s equity.

 
FINANCIAL SUMMARY
General Re Corporation  |  Fiscal Year 2018

Financial Ratings

A.M. Best
A++
Moody’s
Aa1
STANDARD & POOR’S
AA+