Premiums drop for European reinsurers on 2005 renewals: Benfield

Major European reinsurers reported a 5% decline in renewal premiums for 2005, compared to a 2% increase a year earlier, according to the annual “Renewal Roundup” by reinsurance broker Benfield Group.
A combination of flat pricing, minimal increases in shares on placement and “a shortage of attractive new business opportunities” led to the decline, with only Hannover Re reporting increased renewal premiums among the top European reinsurers.
Pricing was reported as stable, Benfield notes, despite a recent survey by the broker which indicated widespread price declines, particularly on property.
Benfield reports strong capacity for good business, however the world’s largest reinsurers Munich Re and Swiss Re did withdraw from certain U.S. casualty lines where competitive pressure was being seen.
Reinsurers continued to move to non-proportional covers, and cedents increased retentions, as reinsurers tried to counter softening primary market pricing. And those reinsurers with higher financial strength ratings, including Swiss Re and Hannover Re, were able to “pick and choose” from a wider selection of business.
Overall, Benfield notes, “underwriting discipline remained the watchword, as they [reinsurers] sacrificed inadequately priced business. Top-line growth prospects appear limited in the short term. Low investment returns reinforce the need for disciplined underwriting, and leave little room for misplaced pricing optimism.”