U.S. Homeowners Insurers Still Not Earning Their Cost of Capital Despite Modest Rate Increases: Aon Re Global Analysis
24 Ottobre 2007 - 2:00PM
PR Newswire (US)
CHICAGO, Oct. 24 /PRNewswire-FirstCall/ -- The countrywide
prospective return on equity for the Homeowners line of insurance
for 2007 is 7.0 percent, up from 5.4 percent in 2006, according to
an analysis by Aon Re Global, a unit of Aon Corporation (NYSE:AOC).
The year-over-year improvement in prospective ROE is due to
marginally more adequate homeowners insurance rates than in 2006
and an expected lower cost of reinsurance, the analysis found.
(Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) The
update for 2007 -- the sixth year Aon Re has undertaken this study
-- is based on a review of the rate filings of the top five
companies in states making up more than 80 percent of the U.S.
population. The study looks at prospective return on equity by
state. As in 2006, a significant difference in prospective ROE is
found between "hurricane states" and "non-hurricane states" -- at
5.4 percent versus 8.7 percent respectively. "Our assignment of
capital by state is based on retained risk by state," said Randall
E. Brubaker, senior vice president and actuary at Aon Re Services.
"We continue to find that approved rates in hurricane states in
general do not adequately reflect the level of risk and capital
requirements derived from operating in these states." The
continuing reductions of policies in force by insurance companies
in the hurricane states and the growth of state-sponsored residual
markets is driven in part by the lower prospective ROE in these
states. "We see the market share of public entities growing in the
hurricane states," said Kenneth Selzer, executive vice president at
Aon Re Global. "Aon Re is working to serve both private insurers
and the public entities to make efficient use of capital in this
changing operating environment." About the Homeowners ROE analysis
Aon Re's Homeowners ROE analysis is based on capital requirements
and cost of reinsurance for an assumed company that operates
countrywide with combined equity capital and reinsurance sufficient
for an expected "A" rating by A. M. Best. The results of the study
are indicative of industry trends, but do not reflect the actual
capital structure, reinsurance, geographic distribution or specific
rate needs of an individual company. Aon Re Services assists its
clients by applying the methodologies in the study to the
particular unique situation and needs of any client. About Aon Aon
Re Global, the world's leading and most preferred reinsurance
intermediary, provides clients with integrated capital solutions
and services through a world-class network of experts in more than
35 countries. Clients are better able to differentiate and meet
their business objectives with Aon Re Global's best-in-class treaty
and facultative reinsurance placement services, capital markets
expertise, and relevant analytics and technical expertise,
including catastrophe management, actuarial, and rating agency
counsel. Aon Re Global was named best reinsurance broker in 2007
and 2006 by readers of Business Insurance, in 2007 by readers of US
Insurer and in 2006 by readers of Reinsurance. Aon Corporation
(NYSE:AOC) is the leading global provider of risk management
services, insurance and reinsurance brokerage, human capital and
management consulting, and specialty insurance underwriting.
Through its 43,000 professionals worldwide, Aon readily delivers
distinctive client value via innovative and effective risk
management and workforce productivity solutions. Our
industry-leading global resources, technical expertise and industry
knowledge are delivered locally through more than 500 offices in
more than 120 countries. Aon was ranked by A.M. Best as the number
one global insurance brokerage in 2007 based on brokerage revenues,
and voted best insurance intermediary, best reinsurance
intermediary, and best employee benefits consulting firm in 2007 by
the readers of Business Insurance. For more information on Aon, log
onto http://www.aon.com/. Media Contact Rahsaan Johnson
312.381.2684
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Re Global CONTACT:
Rahsaan Johnson of Aon Corporation, +1-312-381-2684, Web site:
http://www.aon.com/
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