Munich Re cuts more proportional at July renewal; total book shrinks

Munich Re stepped back lightly at the July renewals, cutting back further on proportional treaties where rates or T&C couldn't cross the bar and partially offsetting with a continued lean into hardening property XoL.

With volume loss across both property and casualty proportional books, Munich Re ended the July renewals with a 1.9% decline in contracted volumes in what management called a continued “focus on profitability”.

“Munich Re selectively discontinued business that no longer met expectations with respect to prices, terms and conditions,” management said in comment accompanying the Q2 earnings release.

The average risk-adjusted rate increase rose to 5.1% from 4.7% at April and 2.3% at January, as Munich Re added in excess of 20% volume to its smaller property XoL book to garner rate increases nearing the 30% mark.

Exclusive of changes in the business mix, Munich Re would have sported a 3.0% increase in average risk-adjusted rate, management said.

Together with tightened T&C, higher attachment points and some move towards distinct pricing of covered perils, the book now looks “more robust,” although the impact may be “not fully captured in numbers,” management claimed.

The broader market is “behaving in a disciplined and risk-trend conscious manner,” officials believe.

Risk-adjusted price increases outside of property XoL proved more stable, all within several percent of prior year levels for the remaining slate of casualty, specialty and proportional property.

Munich Re responded in turn with more cautious engagement: proportional treaty volumes are down; specialty is up neighbourhood mid-single digit. Casualty XoL volumes grew fractionally.

Munich Re's single largest book - casualty proportional - is down by as much as 10% in volume terms, a scatterplot of book changes suggested. That book suffered Munich Re's only aggregate decline in risk-adjusted pricing.

Proportional property treaty volumes were down by a mid-single digit rate, but risk-adjusted prices were said to have advanced marginally from the prior year.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.