Normalized combined ratios

Financial Year 2020 results have now been released for the top 5 reinsurers and on the face of it, they don’t make pretty reading. The top 5 reinsurers all exceeded 100% combined ratio, i.e. lost money this year on an underwriting basis. Yet much of the commentary has been fairly upbeat. Commentators have downplayed the top line result, and have instead focused on an ‘as-if’ position, how companies performed ex-Covid.
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We’ve had comments like the following, (anonymised because I don’t want to look like I’m picking on particular companies):

"Excluding the impact of Covid-19, [Company X] delivers a very strong operating capital generation"

“In the pandemic year 2020 [Company Y] achieved a very good result, thereby again demonstrating its superb risk-carrying capacity and its broad diversification.”

Obviously CEOs are going to do what CEOs naturally do - talk up their company, focus on the positives - but is there any merit in looking at an ex-Covid position, or is this a red herring and should we instead be focusing strictly on the incl-Covid results?

I actually think there is a middle ground we can take which tries to balance both perspectives, and I’ll elaborate that method below.

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