Investors are poised for a hectic period of first quarter reporting from the global (re)insurance sector that will reveal whether the wide-scale pain inflicted on balance sheets in 2008 has eased in the early part of 2009.
With some of the (re)insurers worst-afflicted in 2008, including XL Capital and The Hartford, as well as those that rode the choppy waters relatively unscathed - such as Ace and Odyssey Re - all due to post Q1s this week, the results are likely to provide a fair barometer for the industry as a whole.
Broker fortunes will also be revealed, with global giants Willis and Aon reporting on Wednesday (29 April) and Friday (1 May) respectively, and AJ Gallagher posting its figures tomorrow (28 April).
Despite an active hurricane season that included the devastation of Ike and a first half where significantly higher than average risk losses struck the sector, by far the worst damage for (re)insurers in 2008 came from investment losses amid the market meltdown in the latter part of the year.
Indeed, a report from Aon Benfield today (27 April) calculated that of the 24 reinsurers it tracked, shareholders' funds fell 18 percent in 2008 to $127bn as a result of last year's catastrophic losses.
But it noted that with investment gains and losses for the group swinging from a pre-tax gain of $2.5bn in 2007 to a loss of $18bn in 2008, 12 percent of the opening year capital base was wiped out by write-downs alone.
A further $17bn was lost as a result of net investment losses direct to shareholders' equity.
At the same time, all but three of the companies reported a combined ratio under 100 percent for the full year, despite 2008 ending as the third most expensive catastrophe loss year on record.
With a relatively benign first quarter of 2009 - although some impact is expected from European Windstorm Klaus and the Australian wildfires - underwriting results should be strong.
What is less easy to quantify is the impact of another turbulent period in the investment markets.
Of course, many companies in the sector undertook significant de-risking of investment portfolios after the dreadful last four months of 2008, triggered by the collapse of Lehman Brothers in September.
This was designed to avert further pain on equity holdings, when expectations were that a bear market might see markets plummet right through the first quarter. As such, the rally that kicked off across global markets in early March will not have benefited those that employed the strategy.
Indeed, depending on the timing of portfolio de-risking, significant gains may have been missed out on, with the Dow Jones Industrial Average, for example, bouncing more than 15 percent in March - although it has still recovered less than the falls through the first two months of the quarter.
Those (re)insurers whose portfolios are exposed to some of the worst performing assets, such as private equity, structured products and hybrids, may also experience significant write-downs in Q1.
In addition, (re)insurers may see relatively muted premium figures in the period - particularly those with a heavy focus on energy, US property and retro business, where activity has been tentative ahead of what are expected to be late mid-year renewals.
Continental reinsurers such as Munich Re and Hannover Re have already tempered expectations on rates, describing progress as "satisfactory" rather than trailing the bumper crop that had been predicted during the fourth quarter of 2008.
Among Q1 reporters so far, IPC Holdings saw profits plummet - partly as a result of investment write-downs - while Platinum's profits were also down as lower premium income and investment income impacted the bottom line.
Of the results due this week, among the most eagerly anticipated will be Hartford Financial which, according to analysts, is expected to book another heavy quarterly loss as the weight of investment losses and its variable annuity exposures are brought to bear.
According to analysts from Keefe, Bruyette & Woods (KBW), the beleaguered insurer - which is reportedly considering breaking up its operations (see article 15) - will book negative earnings per share (EPS) of $3.80, compared to a loss of $0.72 a share in the last quarter of 2008.
XL Capital, which is continuing its efforts to recover from a difficult 2008, is projected to unveil EPS of $0.51, compared to $0.58 in Q408 and against a consensus of $0.65, when it reports after markets close today, according to KBW.
Axis Capital, Montpelier Re, and Partner Re are all expected to better Q4 EPS when they report later today, while Ace is expected to match last quarter's $1.87 in EPS when it reports tomorrow, said the analysts, who also expect Arch to significantly outstrip its Q408 performance.
Meanwhile, according to analysts from Commerzbank, the big three Continental reinsurers - Swiss Re, Munich Re and Hannover Re - will all experience further asset impairment when they unveil their Q1s next week.
Swiss Re is expected to deliver a solid combined ratio of 97.4 percent and "stabilising" life and health figures. However, analysts have also pencilled in SFr600mn in asset impairments in the quarter, with valuation adjustments on its alternative investments, credit derivative swaps exposures and financial guarantee business.
Hannover is expected to announce write-downs on its hybrid securities and private equity investment exposures, with a 22 percent fall in investment income to EUR206mn against the first quarter of 2008, said the Commerzbank analysts.
However, the reinsurer is also likely to book an extraordinary profit on its ING US Life portfolio, as well as benefit in its operating results from the new portfolio, while major claims in its P&C business are expected to be within budget.
Munich Re, meanwhile, is expected to report top-line growth as a result of expanding its distribution channels last year and positive exchange rate impacts, together with solid combined ratios.
The reinsurance giant is also expected to take write-downs on equity investments and fixed income securities totalling EUR400mn and EUR180mn respectively, according to the analysts.