Munich Re still sees reinsurance pricing as attractive and its CFO Christoph Jurecka said today that the company is “absolutely prepared” to keep growing into US property catastrophe risks, as long as the business meets its requirements on terms, conditions and price.
The company also said that, “Despite market pressure increasing, Munich Re expects the environment to remain positive in the upcoming July renewal round.”
Asked about the outlook for reinsurance pricing during an analyst call today, Munich Re’s CFO Christoph Jurecka said that overall it “continues to be very attractive.”
“The combination of 1.1 and 1.4 would be less than a percentage point decline from a historic very high level, which means it’s still indeed a very attractive level,” he explained. “Then, it is all risk adjusted, so in these price change numbers, as we interpret them and as we communicate them, the change in exposure, but also the change in the risk, for example, due to climate change model updates and all these kind of things, is all included in there already. So, you have to also keep that in mind.”
Looking ahead to the mid-year reinsurance renewals, Jurecka said, “We are still in very attractive territory, and margins are attractive and this has to be kept in mind also when we talk about volume, because obviously there’s a client relationship, and we want to serve and will serve our clients also going forward.”
He continued, “I think I can only summarise that we continue to be optimistic for 1.6, 1.7 that the markets will continue to be attractive for us and will allow us to also generate attractive margins out of our business going forward. Based on the very attractive starting point where we’re at, and also based on what we saw, particularly 1.1, a bit less so in 1.4.”
Asked specifically about US property catastrophe reinsurance renewals and whether that is an area Munich Re would look to continue growing, Jurecka said, “US property growth, absolutely.”
“If the business meets our requirements when it comes to terms and conditions, but also price, of course, we are prepared to grow that business,” the CFO explained. “It’s a healthy business, generally, and as discussed earlier today, the margins are still in a very attractive place, generally speaking.
“Now it will depend on the renewals, and also how the LA wildfire will impact those renewals in 1.6 and 1.7. But yes, generally, we are absolutely prepared to grow in that area as well.”
Also read: Munich Re pegs LA wildfire losses at €1.1bn, cites “market challenges” at April 1st.
