Rates still softening but prices hike on loss-hit treaties: Hannover Re

Pricing on many lines of business continued to soften in the June 1 and July 1 renewals on the back of intense competition though price increases were recorded on treaties hit by losses, especially in Australia and New Zealand, according to Hannover Re, commenting in relation to its  first half results.

But the reinsurer said despite the challenging environment, it expects to continue operating with sustained success going forward and its underwriting result for the full 2017 financial year to come in on a level that will still be good despite the protracted soft market. It still enjoyed premium growth of roughly 10 percent in the recent renewal and said it anticipates it will finish the year with a combined ratio of less than 96 percent.

“As had been anticipated, the renewals in property & casualty reinsurance as at 1 June and 1 July 2017 were highly competitive,” the company said. “The bulk of business in Australia and New Zealand, part of the North American portfolio, natural catastrophe risks and some areas of credit and surety business are traditionally renewed at this time of year.

“In Australia and New Zealand appreciable premium erosion was observed under programmes that had been spared losses, although significant price increases were booked for loss-impacted treaties. This was especially true in Australia as a consequence of cyclone ‘Debbie’ and in New Zealand following the earthquake in Christchurch. In North America, despite the pressure on rates, the outcome of the renewals was satisfactory overall with a premium increase of around 15 percent.

“All in all, the total portfolio up for renewal showed pleasing premium growth of roughly 10 percent.”

In life & health reinsurance it said it anticipates further demand for reinsurance solutions providing solvency relief.

“Not only that, the longevity sector continues to develop briskly around the world, offering very attractive growth potential for the company,” the company said. “In Asia, too, a diverse range of business opportunities are emerging that the company is cultivating in a dialogue with its customers.

“Hannover Re continues to aim for a value of new business in excess of €220 million. The targeted EBIT margins remain unchanged at 2 percent for financial solutions and longevity business and 6 percent for mortality and morbidity business.”

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