Munich Re stalls at 1/1 on 3.6% increase; derides rivals’ claims

Munich Re took a mere 2.3% risk and inflation adjusted price increase at the 1/1 reinsurance renewals while increasing total exposure volumes by some 1.3%, then accused rivals of irresponsibly inflating their own claims of headier rate gain.

Sums render a 3.6% increase in book (risk- and inflation-adjusted), well below the ca. 6% from 2022 or the roughly 27% change from 2021 or 14% from 2020, calculations against prior reported price and volume changes suggest.

CEO Joachim Wenning (pictured) bristled during a morning briefing at suggestion that Munich Re had been beaten by peers claiming notably higher rate gain at the 1/1.

“I am very confident and sure, absolutely certain: it is impossible that our peers put through higher rate increases than we did,” Wenning told reporters. His theory: only Munich Re is measuring against rising loss estimates, including the impact of inflation.

Any price gain that only covers loss trend and inflation “is not a good price increase, that is an absolutely necessary price increase,” Wenning said.

Of its own 2.3% rate gain measure, Munich Re believes the trend “developed positively overall” and “more than compensated” for rising loss estimates and the impact of inflation, management said in separate comment. Price growth included a mere 1.3% of like for like gains plus a 1 percentage point boost from the change in the portfolio mix.

The 1.3% volume growth is well below the nearly 12% growth level from the prior two renewals and the ca. 7.5% growth rates in 2019 and 2020. The group renewed only “around two thirds” of its non-life treaty business with a focus on Europe, the USA and global business.

Management could say only it was “well positioned for further business growth.”

“Despite increasing market pressure, Munich Re expects the market environment to remain positive and to present attractive growth opportunities in the upcoming April and July renewal rounds,” management said.

More than growth, management bragged of "active optimisation of the portfolio" plus some new growth "across almost all regions."

Management cited “material improvement in terms and conditions” including exclusions and coverage definitions, in addition to higher attachment points and “distinct pricing of covered perils.”

Such changes make the portfolio “more robust” although the gains remain “not fully captured in numbers.”

Munich Re claimed to have moved away from proportional business and towards excess of loss on catastrophe exposures, but the relative size of those books capped the amount of benefit that Munich Re could capture.

Munich Re claimed a 40% volume increase in property XoL alongside high double digit price gain, but little of that could flow through to the headline price and volume numbers as property XoL remains a mere 10% of the renewed portfolio.

“Munich Re continues to have capacity within its overall risk appetite for cat business in a healthy pricing environment,” management said by way of consolation.

Proportional property was down fractionally in volume terms and won a low-single digit pricing gain.

In casualty, Munich Re likewise moved towards XoL deals at the expense of the much-larger proportional book. The bulk of that move came in the US and chiefly on rate, management said.

To read Munich Re’s full year 2022 results,  click here.

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