Munich Re has said prices for the reinsurance treaties increased in the renewals as at 1 January 2018, particularly in the markets most affected by natural catastrophes.
“Other markets and branches were also freed from the pricing pressures of previous years, and price development was stable or even slightly positive. Despite the high losses from natural catastrophes in 2017, the availability of reinsurance capital remained high during the January renewals, so price increases were moderate overall, due also to the slight rise in market interest rates,’’ said the second largest global reinsurer while announcing its annual results on Tuesday.
Munich Re expects market conditions to continue to improve in the remaining renewal rounds in 2018, although claims experience in the individual market segments will play a major role. The renewal date of 1 April is mainly for reinsurance treaties in Japan, whereas 1 July is the renewal date for the USA, Australia and Latin America.
As at 1 January 2018, around half of Munich Re’s non-life reinsurance business was up for renewal, representing premium volume of €8.3bn. Of this, 14% (around €1.2bn) was not renewed. By contrast, Munich Re wrote new business with a volume of approximately €2.3bn.
The volume of business written at 1 January thus increased by 19% to around €9.9bn, due partly to new large-volume treaties in the USA and Australia. Prices increased by around 0.8%; they had fallen by 0.5% on average in all 2017 renewal rounds.
Gross premiums written by the Munich Re Group increased slightly in 2017 to €49,115m (48,851m).
Due to high natural catastrophe losses, the result in property-casualty reinsurance fell to –€476m (2,025m). For the same reason, the combined ratio for 2017 amounted to 114.1% (95.7%) of net earned premiums, and totalled 103.9% (101.9%) for the fourth quarter.
Natural catastrophe losses amounted to €3,678m (929m) for the full year, while the figure for the fourth quarter was €492m (460m). Hurricanes Harvey, Irma and Maria – with a total loss of €2.7bn – were the most expensive loss events of the year.
Man-made major losses were slightly above the level of the previous year, and totalled €636m (613m) – which is equivalent to 3.8% (3.6%) of net earned premiums. In the fourth quarter, expenditure for new major losses and the release of provisions for major losses in prior years balanced each other out.