Swiss Re says M&A are still reshaping CEE re/insurance landscape

Eastern Europe is still a region where market consolidation happens in original markets, said regional expert Christian Kreutzer, market head of Austria, Central and Eastern Europe (CEE) and transaction lead Northern Central Eastern Europee at Swiss Re.

Various entities are involved in this process, meaning mergers and acquisitions “will further change the market landscape”, Kreutzer told Baden-Baden Today.

“Consolidation of the insurance market, and with this the consolidation of reinsurance programmes, is a continuous trend we are observing. Portfolios increasing end up in stronger balance sheets,” he said.

Kreutzer said that under this changing environment, reinsurance has a stronger focus on managing volatility rather than purely providing capacity or capital.
“It’s a process which we as reinsurers need to support,” he added.

However, Kreutzer said, he would prefer that “rather than continuously fighting for the existing cake, the industry could instead increase the cake by developing new insurance regimes together with our clients in the markets”.

“With all insurable risks, we still see significant protection gaps and that should be the focus of our industry to see how we can provide more sustainable coverage for economies.”

Asked about market trends in CEE, he said he had observed rising exposure and higher compensation regimes in motor lines.

“The frequency of incidents is going down but we still observe a tendency for larger bodily losses, so a €5 million loss is no longer an outlier in Eastern Europe over the last couple of years.

“We support our clients in managing those claims,” Kreutzer said.

“These claims trends need to be reflected in the reinsurance conditions, while rates need to be adjusted in accordance with the larger loss impacts we see in motor around CEE.

“The need for changes in market terms and conditions is further accelerated by the fact that we are confronted with an extremely low yield environment. In Europe, they are even talking about negative yields, which will put further pressure on the technical results for re/insurers.

“This will further increase the need for rate improvements on the motor side.
“In property in Eastern European over the last year, there has been a relatively benign loss activity, so the expectation in property lines will be that programmes that are loss-affected will see changes on terms and conditions while in the remaining part we will aim to reflect the changes in exposure,” he concluded.