Competition in store for reinsurance market

Munich Re renewed about two thirds of its property-casualty treaty business (i.e. excluding facultative reinsurance), which corresponds to a premium volume of around 9billion, according to a press release.
The prices, terms and conditions negotiated on the reinsurance treaties were again in line with the risks.
“We are satisfied with the outcome of renewals at 1 January. All in all, the price level is attractive and commensurate with the risks. However, competition is tougher. For the market, this was not a renewal for profitable growth,” commented Board member Torsten Jeworrek.
Munich Re acquired some 850 million of new business with good profit potential.
By contrast, where prices had come under pressure, it reduced exposures, decreased its share or, where they were inadequate, withdrew completely.
Ultimately, written premium as at 1 January 2007 is expected to be approximately 300m (3%) lower than at 1 January 2006. The price evolution varied by line of business and region, rates for the renewed portfolio being slightly lower overall, while profitability levels remained good.
The share of non-proportional business in the renewed portfolio increased to 23% (21% in the previous year). Property, which is relatively short-tailed, accounted for 42% (38%) of renewed business and casualty for 41% (44%).
Despite the relatively quiet hurricane season in the Atlantic, prices for US hurricane-exposed business have risen significantly and are on a par with price levels at 1 July 2006 renewals. Major multinational treaty renewals went very well in property and casualty business, prices, terms and conditions remaining stable. There was further growth in attractive agricultural business.
Substantially less capacity was available in the international retrocession markets than in previous years, resulting in considerable price increases.
Globally, the reinsurers’ capital base has improved, while competition is growing more intense.
Prices are nevertheless at a profitable level on the whole, according to the press release.