Hard market without end: Munich Re calls reinsurance rally into 2025

The reinsurance market has considerably more runaway rate-drivers than can be tamed near-term, leaving the hard market in place well into 2025, leadership at  Munich Re has declared.

“The hard market will clearly sustain into 2025,” CEO Joachim Wenning (pictured) told journalists following publication of his company’s Q2 earnings statements.

The Wenning view has an element of “this time is different” to it as what used to be temporary or secondary drivers edge their way towards the front seat, he indicated.

“There are some aspects now that do not prevail every year,” he said. The rising star: climate change; the enduring compounding factor: inflation. “They are special,” he said of the add-on front-runner drivers.

Climate change is only ever increasing its impact, “is not going to go away, and is not going to make it cheaper,” Wenning said of his evolving market calculus.

Inflation, for its part, has endured well beyond its initially expected one-off impact, he added.

“My feeling is it will not take only one year in 2024 to catch up with all of that,” Wenning said. “It will last longer.”

Wenning's comments show a reasoning built somewhat differently than the would-be market consensus which is built on a supply-demand imbalance story starting from a long-running sory of reinsurance returns below cost of capital, the Q2 2022 bond market losses and the ensuing inability to attract major new capital.

“Those points are true each and every year,” Wenning said. Capacity shortages are not so exceptionally palpable on the market of late, Wenning suggested.

“Capacity is in the market,” he said, with caveat for “sustainable higher rates” and unspecified smaller pockets of dislocation.

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