Question hangs over results

Several insurer chief executives were being coy with me over the amount of reserve releases propping up their latest results, though perhaps they can be forgiven given the exceptional economic context. With AIG and some of our largest banks making spectacular losses, the results are relatively reassuring, though let's hope that insurers are putting plenty in the pot because this year they are going to need it more than ever.

Axa, for example, had a torrid time in 2008 in its commercial book, with a combined ratio well in excess of 100% after a surge in severe fire claims. Philipe Maso, Axa's chief executive officer, is taking dramatic action by cutting its MGA exposure with Fusion and Primary. Intriguingly, former Axa director Mark Cliff has been signing up Fortis as a replacement. RSA, which also had major fire losses, announced an increase in profits in the UK (underwriting result improved to £99m, an increase of £34m) but once again is cutting jobs - 1,200 of them - to save £70m and to reduce the expense ratio to around 14% for 2012. Zurich, so far, has probably had the best set of results in the UK at £295m of profit - returning to pre-2007 levels - and they did a large round of job cuts last year so should be in a strong position. Groupama again posted consistent profits, although once again its chief executive officer Francois-Xavier Boisseau has made strong calls for more action and less talk on rate increases.

Having attended a climate change conference at the Chartered Insurance Institute this week, insurers will need to be careful about too many cost cuts after the possibility was raised of a 1987-style storm event causing four million claims in a month: are insurers keeping enough staff to cope with this scenario?

This year is going to be challenging for investment incomes and reserve releases will come into play again, so rate increases are more important than ever - especially in helping to keep the reserves as full as possible.