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Munich Re seeks US
growth as rates rise
on back of nat cats
Munich Re is seeking opportunities to grow in
North America after losses stemming from
the large nat cat events in the third quarter improve
pricing, Hermann Pohlchristoph, member of the
board of management at Munich Re, told Baden-
It is estimated that hurricanes Irma, Harvey
and Maria which hit North America in the
third quarter will cause around $100 billion in
combined insured losses.
The reinsurance industry sees the events as an
opportunity to raise prices which have been under
pressure in recent years due to the absence of large
losses and an overcapacity as third party investors
have deployed capital into the reinsurance sector
while seeking higher yields in a historically low
interest rate environment.
The traditional reinsurance market has
been complaining about inadequate rate levels,
particularly in the nat cat market, for a while and
has been pushing for higher rates in past renewals.
After the large losses, the industry is in a better
position to get what it is asking for.
“One would expect positive price impacts from
this, also considering that for the last five years
across the board and in all regions of the world
there has been very significant price deterioration.
Property cat rates in the last five years fell by
some 40 to 50 percent, so very dramatically,”
Pohlchristoph said. (Continued on page 8)
Hannover Re prepares to
grow its book as nat cat
losses drive rates upwards
Lines of business hit by the natural
catastrophe losses in the third quarter of
2017 could ultimately offer an opportunity
for Hannover Re to grow its book of business,
Michael Pickel, executive board member–
property & casualty target markets, Hannover
Re, told Baden-Baden Today.
He said that in the run up to the renewals,
the reinsurer will first be assessing how primary
rates respond to the losses. Where rates in this
segment of the business harden, Hannover Re
will look to ensure it also benefits.
“We will look at all affected loss areas and
see whether the primary business will react;
where the primary rates show some hardening
we will take advantage of it,” Pickel said.
Total insured losses from the natural
catastrophes including hurricanes Harvey,
Irma and Maria could exceed $100 billion,
according to estimates from the catastrophe
modelling companies. And that is before the full
extent of other losses, including the California
wildfires, are taken into account.
Hannover Re issued a profit warning on the
back of the US catastrophes. It expects losses
will exceed its large loss budget because of
them and this is likely to result in the company
missing its targeted €1 billion ($1.18 billion)
group net income in 2017.
But Pickel described the losses as potentially
having a positive effect on the industry. He said
the absence of large losses had driven rates to
a point where they did not reflect the reality of
catastrophe events (Continued top of page 2)
Hiscox Re to increase capacity on back of balanced book
Hiscox Re’s strategy of balancing its
internationally traded, catastrophe
exposed big ticket insurance and reinsurance
lines with low volatility retail business is built
exactly for times like this—when rates are likely
to harden, according to Andrew Dolphin, chair
of international business at Hiscox Re.
He said the strategy, which Hiscox Re has
maintained for more than 20 years, puts the
company in the unique position of being able
to grow its reinsurance and big ticket insurance
book in line with opportunities—yet it is also
“Depending on pricing,
we are prepared to grow our
under less pressure to maintain its top line
when market conditions deteriorate.
“Depending on pricing, we are prepared
to grow our European property reinsurance
portfolio; however, much of the European
business we see requires a significant rate
increase to look attractive,” he added.
This follows an announcement made on
October 11 by Hiscox that it plans to increase
its 2018 capacity for Syndicate 33 at Lloyd’s
by £450 million ($594 million) to £1.6 billion
($2.1 billion), subject to Lloyd’s approval.
The increase in capacity is driven by an
expected improvement in market conditions
and a desire to have sufficient capacity available
to participate in a widespread market turn,
said the firm. (Continued bottom of page 2)
Tuesday October 24, 2017
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