The world's largest reinsurer Munich Re has announced that it renewed about 66% of its treaty business in property-casualty reinsurance, involving a premium volume of around E8.9 billion.
The firm says that, by consistently implementing its strict underwriting policy, it expects earnings potential to remain high for its property-casualty portfolio.
According to the company premium volumes will rise by around 5% thanks to the renewed business (taking into account price increases). Meanwhile, some 7% of new business was acquired and approximately 6% of its business was not renewed as premiums because conditions did not meet Munich Re’s requirements. On average, a 3% rise in rates was achieved for business renewed, with the usual variations in prices and conditions according to trends in specific regions and classes of business.
As was to be expected, the largest price increases involved treaties affected by the 2005 hurricanes, rates going up here considerably (high two-digit figures). The highest increases were in offshore energy, with approximately 400% on the primary insurance side, from which Munich Re profited in proportional reinsurance business and via its primary insurance subsidiary Watkins in London.
Board member Torsten Jeworrek commented: All in all, we are highly satisfied with the renewals. Our clients understand that if you want to buy or sell first-class reinsurance cover, there is simply no alternative to risk-adequate prices and conditions.
The hurricanes in the US, Mexico and the Caribbean in the summer and autumn of 2005 had a definite impact on the renewals, as did experiences from the windstorms in 2004. These natural catastrophes clearly demonstrated the threat posed to many people and also the high exposure of insured values. They also made it necessary to reassess the risks.
Adjustments have been made to the windstorm models (based on historical data and scientific knowledge) that reinsurers use to determine possible loss scenarios in the future. Munich Re has also adapted its catastrophe risk models and taken account of the results in the treaties it renewed.