Insurance Day is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call UK support +44 (0)20 3377 3996 / APAC support at +65 6508 2430

Printed By

UsernamePublicRestriction

European reinsurers strike bullish tone despite rising risks

Tailwinds from the hardening market are expected to be outweigh the mounting risks from economic inflation and heightened financial market volatility

With Hannover Re reporting its financial results last week, the 'Big Four' European reinsurers have now given their outlook for the year ahead. 

The tone from all four reinsurance giants was bullish and all but one took on more natural catastrophe catastrophe risk in reaction to rising prices.  Only Scor reduced its exposure to natural catastrophe business to limit earnings volatility, and argued that prices were not yet sufficiently high to justify the risk.

Sven Althoff, who leads Hannover Re’s property/casualty reinsurance business, said he expects further rate increases on Japanese business at the April renewals, but the rate of increases is expected to slow.

However, renewals on US and Australian business, which are due in the summer, should maintain strong upward tendencies, he said, with similar rate increases as seen at the summer 2021 renewals, with no slowdown in particular on US wind risk. 

Munich Re said it would seek growth especially in loss-hit areas, where rates are expected to rise more sharply. Chief financial officer, Christoph Jurecka, pointed in particular to the 2021 European floods, one of the largest natural catastrophes suffered by the European continent, for which industry losses are estimated at around $13bn. He also referred to Hurricane Ida, which hit the US in August, costing insurers roughly $37bn.

Meanwhile, Swiss Re expects the performance of its property/casualty (P&C) businesses to continue to improve this year as it reaps the benefits of the group’s "sustained focus on portfolio quality in combination with increasing prices”.

Scor, by contrast, took a more measured tone, given the fifth year of a high frequency of natural catastrophes. 

Laurent Rousseau, Scor’s chief executive, outlined the objectives as "reducing volatility, increasing profitability, growing the franchise, optimally allocating capital and embarking on the transformation of the group". 

'[Our objectives for 2022 are] reducing volatility, increasing profitability, growing the franchise, optimally allocating capital and embarking on the transformation of the group'

Laurent Rousseau
Scor

Combined, the net income of the four major reinsurers almost quadrupled, to €5.8bn ($6.4bn) in 2021 compared to the previous year. This included a €2.93bn contribution from Munich Re (up from €1.21bn year over year) and a $2.1bn contribution from Swiss Re (improving from a net loss of $247m in 2020).

Bottom-line results were helped along by lower Covid-19-related P&C claims and stronger investment results. These factors outweighed a heavy natural catastrophe loss and high Covid-19-related mortality claims on the life reinsurance side.

Moody’s has warned that natural catastrophes and claims inflation remain significant risks in 2022. The Russia-Ukraine crisis, should be “manageable” for insurers, the rating agency said, but it “clearly adds to the risk landscape” and increases uncertainty.

But Moody’s also noted the outlook for reinsurers is supported by price hardening across P&C, including at the January 1, 2022 renewals.

Rival Fitch agreed the tailwinds from the hardening market environment are still strong enough in 2022 to counterbalance the mounting risks from economic inflation and heightened financial market volatility.

 

Topics

UsernamePublicRestriction

Register

ID1140154

Ask The Analyst

Ask The Analyst - Ask Your Question Send your question to our team of expert analysts. You can: • Ask for background information on/explanation of articles in Insurance Day * • Find out more about our views on industry developments • Ask for an interpretation of market trends • Source supplementary data relating to articles • Request explanations to further your understanding of current issues (* This relates to any Insurance Day that is included as part of your subscription) We will do the research and get back to you personally with the information you need.

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel