Some Renewals volumes news from Hannover Re;
Hannover Re achieved an inflation- and risk-adjusted price increase on renewed business of 8.0% in the treaty renewals as at 1 January 2023 in traditional property and casualty reinsurance.
The market environment for the renewals was very challenging for all participants. Russia’s war against Ukraine, sharply higher inflation and continued heavy losses from natural catastrophes took a toll on the results posted by insurers and reinsurers. The resulting stronger demand among primary insurers for reinsurance protection, however, came up against a tighter overall supply. This gave rise to significant improvements in risk-adjusted prices and conditions for reinsurers. Improving terms and conditions such as higher retentions by primary insurers or limitations of coverage are not fully reflected in risk-adjustments, thereby further improving the risk profile for reinsurers.
“We had to take some conscious decisions on portfolio steering in order to respond to the market challenges,” said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. “As a result, we have achieved a durable improvement of the quality of our portfolio from which we will benefit in the long run.”
Of the total premium volume booked in the previous year on an underwriting year basis in traditional property and casualty reinsurance amounting to EUR 15,543 million (excluding facultative reinsurance, ILS business and structured reinsurance), treaties with a volume of altogether EUR 9,870 million – or 63% of the business – were up for renewal as at 1 January 2023.
Hannover Re renewed a premium volume of EUR 8,494 million, while treaties worth EUR 1,376 million were either cancelled or renewed in modified form. Including increases of EUR 576 million from new treaties and from changes in prices and treaty shares, the total renewed premium volume came in at EUR 9,798 million. The renewed volume was slightly below the previous year.
Adjusted for the sharp surge in inflation, the pricing momentum slowed in many lines of primary insurance. Non-proportional reinsurance consequently fared better than proportional business, which is linked directly to the market development in primary insurance. Hannover Re therefore responded by growing its non-proportional book by 21.4% in the renewals to a premium volume of EUR 3,162 million. The risk-adjusted price increase amounted to 20.7%.
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