As I write this letter, we’re nearing the end of our first full year together as XL Catlin’s Reinsurance team. We’re all excited about the opportunities ahead of us and are ready to take on the challenges.
Looking back at 2015, our team achieved solid results. Lower natural catastrophe losses were offset by losses from the Tianjin port explosion and loss activity in our property facultative portfolio. Despite those losses, the segment generated a strong combined ratio of 81% for the year and a resulting underwriting profit of $478 million. Gross premiums written were $2.3 billion for the year, a 27.3% increase over the prior year, driven primarily by the combination of XL and Catlin.
Looking at the past year, I’m proud of what we accomplished, despite the ongoing challenges of this reinsurance market. In 2016, we’re challenging ourselves to explore every avenue to grow profitably and succeed as a leading global P&C reinsurer in the long term.
Reinsurance at XL Catlin
During 2015 we brought together two strong, innovative companies. We substantially increased our financial strength, grew our product offerings and solidified our presence in the world’s major reinsurance markets. Along with these benefits, there were hurdles to clear. Our team successfully aligned systems and processes so we could maintain the service standards our clients and brokers expect.
Looking ahead, we’ve identified five key principles to guide us as we navigate an evolving market:
- Underwriting and Analytics — We believe we have some of the best risk-taking talent in the reinsurance industry. We not only have a deep understanding of our products, but we can also provide powerful analytics to help brokers and clients assess risk and understand the cost of risk transfer.
- Client Focus — Our teams have multi-decade relationships with clients and brokers. We’re building upon these deep connections with a partnership approach, using our increased and diversified product offerings and expanded global reach to give our clients more flexibility across the cycle and across the globe.
- Alternative Capital — As individual companies, we were active in this area and together we are working on expanding our ability to match the appropriate capital to each class of risk we assume.
- Operational Excellence — We continue to be market leaders in underwriting response time, fair claims payment and contract wording execution. The global coordination across XL Catlin’s Reinsurance platforms provides the same level of operational excellence wherever our clients are in the world.
- Innovation — Our collective expertise as risk specialists allows us to identify and respond to risks that exist at, or beyond, the boundaries of traditional insurance risk. And XL Innovate, our sponsored venture capital initiative, is one of the many tools we’ll use to bring new solutions to the marketplace.
With this foundation, I’m confident we’ll be well positioned to address the world’s most complex risks.
On behalf of the entire global Reinsurance team, thank you for your continued support of XL Catlin.
Chief Executive, Reinsurance Operations