Natural disasters sent FM Global into a net loss of $US41.5 million ($40 million) for 2011 compared with a $US686 million ($662 million) profit in 2010.

Chairman and CEO Shivan Subramaniam says six events triggered losses over $US100 million ($96 million), including the Thai and Brisbane floods, US tornadoes and the earthquakes in Japan and Christchurch.

He says the year’s aggregate losses were the largest in the mutual’s history, overtaking its 2001 loss from the World Trade Centre attacks and 2005 losses from hurricanes Katrina, Rita and Wilma.

Mr Subramaniam says rates continued to fall in 2011 until the third and fourth quarters when they began to rise in the US and Australia.

FM Global Australia Operations Manager Ian Berg told insuranceNEWS.com.au that rates in both Australia and New Zealand are hardening following last year’s disasters.

He says there has been an across-the-board increase locally of 5-10% this year, on top of a similar rise last year.

But Mr Berg notes the impact on clients depends very much on their exposure to windstorm, earthquake and flood risk.

He says it is “inevitable” that insurers and reinsurers are pricing risk differently given the losses they have suffered and he foresees a continued firming and hardening of the market.

FM Global’s combined ratio rose to 121% from 82.8% in 2010.

Its gross premium increased 5% to $US4.9 billion ($4.7 billion) and its investment income rose 5% to $US364 million ($351 million).

Mr Subramaniam says substantial premium growth is coming from existing policyholders, mostly multinationals growing outside North America and Western Europe into countries with higher risk profiles and different regulatory requirements.

He says FM Global remains focused on overcoming these challenges to deliver a seamless global platform.