MetLife reported a 36% increase in premiums, fees and other revenues from the insurance business outside of the U.S. in the year 2010, mainly due to the addition of about $836 million from ALICO's one month operations. MetLife acquired ALICO for about $15.5 billion from AIG as a part of its strategy to grow internationally. The acquisition has enabled MetLife to serve 90 million customers in over 60 countries and has significantly boosted MetLife's position as a leading insurance company in the U.S, Japan, Latin America, Asia Pacific, Europe and the Middle East.

Some amazing information has come to light regarding AT&T (ATT), Verizon (VZ), Caterpillar (CAT) and Deere & Co. (DE). It would seem that these companies (among a host of others, I'm sure) have initially determined that dropping health coverage for employees could significantly benefit their bottom lines, and thus benefit investors.

No Surprise Here

As reported by CNNMoney.com, when the health reform bill finally received the president's signature, many large companies began to assess the potential costs of the legislation. At the same time, much was made of the large write-downs that companies took in reaction to changes brought on by the new law.

Catastrophe bond capacity is maturing, and not much of it is coming back. In the first quarter, $1.8 billion in cat bond risk capital matured, and only $508 million returned in the form of new issuances, according to Thomson Reuters. This quarter, $2.77 billion is maturing, and the absence of first-time issuers makes it unlikely that the market will replace it all. More than a billion of it was from State Farm's Merna Re transaction. The successor to it has already been issued, cleverly named Merna Re II, at only a fraction of the previous bond.

The first catastrophe bond of the quarter closed on opening day ... and it was a big one. State Farm's Merna Re II transaction was good for $350 million in risk capital, upsized from the earlier reported amount of $250 million. Though large, it doesn't compare to the previous Merna Re catastrophe bond, which set a record at $1.2 billion that remains to be beat.

Merna Re II was oversubscribed, but State Farm only wanted to place $350 million, Thomson Reuters reports (registration required). According to one investor who knew about the transaction, "The deal was oversubscribed at +365 basis points and after being upsized to $350 million." The investor added, "The initial price talk was 365 - 405 bp, but the deal got priced at 365 bp. However, Merna was a simple transaction and State Farm only wanted to place 350 million."

The first quarter of 2010 will probably go down in history as the worst ever for catastrophe losses.

According to global reinsurance broker Willis Re (WSH), the insurance industry recorded $16 billion in insured losses, from the Chile earthquake and Windstorm Xynthia in Europe, but the largest losses occurred in smaller markets, where it premium volumes aren't as large. Since the third and fourth quarters tend to be the most loss-prone of the year, a quarter that is normally quiet could set the stage for outsized losses.

The first quarter catastrophes weren't enough to push property-catastrophe reinsurance rates lower. Even though the first quarter was a busy one for catastrophe losses, particularly for global reinsurers, they weren't sufficient to change the market. As a result, the four regions renewing at April 1, 2010 -- the United States, Japan, Latin America and South Korea -- ranged from soft to controlled, according to the latest from Guy Carpenter, the reinsurance arm of Marsh & McLennan (MMC). This comes as no surprise, as indications throughout the run-up to the renewal pointed to an orderly process in which there would be enough capital to support the market's needs.

Look for big numbers from the property/casualty sector of the insurance industry for full-year 2009. Light catastrophe losses were a big help, leaving more cash in the coffers to benefit from the recovering financial markets following the September 2008 crisis. Reinsurance companies, in particular, will benefit from the light catastrophe activity of 2009.

Among 52 publicly traded insurance companies, rating agency Fitch reports, the incurred loss ratio fell to 65.8%, a decline of 1.8 percentage points, and the expense ratio increased to 28.5% (up 0.6 percentage points). This caused underwriting profits for the entire group to improve, as indicate by the overall combined ratio of 94.3% for 2009, down from 95.5% in 2008 (a lower combined ratio s a positive development).

As with just about every impact of the financial crisis on the insurance industry, the increase in securities class action lawsuit settlements wasn't as bad as the industry expected.

According to a study by Stanford Law School and Cornerstone Research, settlements grew only 39% year over year in 2009. Insurers and reinsurers writing directors and officers insurance in the U.S. are probably relieved to see that the reality didn't reach what they feared. The number could tick higher, though, as these cases work their way through the court system.