Rate reductions not sustainable, says Allianz Re CEO
The reinsurance industry is reaching a point where economics will prevent further significant price reductions.
This is according to Amer Ahmed, the chief executive officer of Allianz Re, who added that the reinsurer’s assessments “showed that rates in some parts of the market are reaching a level where they don't seem sustainable and don’t justify the risk/reward.”
He said: “In January, some reinsurers reduced their commitments where they felt this was the case, that shows that we are reaching a point where economics prevent further significant price reductions.”
Ahmed believes the general trends seen in the January renewals will continue into the mid-year renewals, with insurers having the widest selection of providers and reinsurance structures to choose from that Allianz Re can recall.
“The July renewals will be the most interesting as they focus on the US, which is the largest market and offers the biggest capacity for catastrophe coverage,” he said.
Ahmed added: “We expect a continuing soft pricing level across all regions and lines, although in some areas we believe we’re close to a level where further reductions in pricing are not sustainable from our perspective. Regarding a differentiation between regions and lines, loss activity during the upcoming months will be a key factor as this may drive local variations.”
