The growth in new business shows the industry’s resilience and ability to adapt to the changing economic environment. Since the business slowdown experienced in 2001, total new business volume reported by Berne Union members demonstrated a remarkable comeback as the 2004 levels were more than 60% above the US$470bn new business generated three years earlier.
New business in the short-term credit field rose to US$693bn, 25% above the previous year’s level.
Members reported heightened activity in both developed and developing markets, with key sectors being steel, automotive, IT, telecoms, retail and agrifood.
Among emerging markets, leading the table of exposure is China with over US$12bn, followed by Mexico, Brazil, Turkey and Saudi Arabia – each with exposures of about US$4bn.
Medium/long-term credit new business reached its highest level in 10 years growing to US$76bn – a 16% rise over 2003.
The main factor was the return of the big ticket project as rising commodity prices led to new transactions in mining, metals and infrastructure – particularly in developing markets.
Investment insurers saw total new business rise 25% to US$19bn, adding to the existing commitments for a new total of US$76bn.
With renewed interest in political risk insurance from strategic equity investors, members reported significant commitments for Brazil – US$10bn, China – US$9bn as well as Indonesia, Russia and the Philippines for US$5bn each.
Demand for cover was driven by new infrastructure projects in the Asia-Pacific and Middle East regions for investments in the mining, water and oil and gas sectors.
Members also reported high levels of positive cashflow as premium received of US$6bn coupled with record recoveries of US$10bn were four times greater than claims paid amounting to US$4bn.
Hans Janus, president of the Berne Union explains: “2004 was an exceptional year as recoveries rose to their highest level in over 20 years, whereas claims paid reached the lowest level over the same period. Overall, business levels are still strong in 2005 and with several large transactions in the pipeline, we could be looking at another year of strong results.”