Swiss Re likely took top rewards from 1.1 renewals among Euro peers

Swiss Re likely bested its major European reinsurance rivals in taking a margin boost from the 1.1 renewals, ahead of a "very positive" results at  Munich Re and more muted tones for  Hannover Re and  SCOR, analysts at  Deutsche Bank Securities are telling investment clients.

"Swiss Re’s tone will likely be incredibly positive, and to our mind, is the most likely to be the most optimistic around the implications for future margins," analysts at Deutsche Bank wrote.

The kick from 1.1 pricing gains should be enough to offset recent inflationary pressures and allow management to target a combined ratio in P&C Re below 94%, even closer to the 93% mark, Deutsche Bank said, with caveat that with margin-boosting nat cat exposure comes the threat of earnings volatility. Measured against cost of capital, the boost seems more modest.

Munich Re ranked second in the brokerage's view of the 1.1 reinsurance renewals, having likely enjoyed "very positive" conditions for renewals. Deutsche Bank is expecting to hear of "at least mid-teens volume growth and low- to mid-single-digit risk adjusted price increases."

For Hannover Re, Deutsche Bank largely agrees with a visible market consensus that Hannover Re is "less positively geared to the upside from the hard market" but does expect a strong blend of low double digit volume growth and mid-single digit risk adjusted price increases.

SCOR will not only lag in terms of volume, but would be well-served in doing so given the group's history of earnings volatility and ongoing de-risking campaign, Deutsche Bank analysts said.

"We would hope that SCOR’s outcome is towards the lower end of the peer group range in terms of volume growth," analysts wrote. "If SCOR ends up growing in line with peers, or even more aggressively, this could arguably raise some concerns." SCOR should offer mid-single digit top line gains or better on the basis of pricing alone.

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