Munich Re grows 1.1 book 3.5% on muted pricing; casualty appetite splits
Global reinsurer Munich Re took a mere 0.3% risk- and inflation-adjusted price gain during the 1.1.2024 reinsurance renewals while increasing total exposure volumes by some 3.5%, all well below levels claimed by major rivals.
Management called the result “another good renewal in an ongoing attractive market environment” with prior year strong pricing improvements “fully preserved.” Munich Re had likewise posted price growth significantly below peers after the 1.1.2023 renewals, then derided rivals for free and loose pricing assumptions.
Management now claims to be similarly “optimistic about April and July renewals” where its nat cat load is greater.
Munich Re walked in with €15.2 billion up for renewal, took a pass at €1.3 billion from the sum, increased the volume of the renewed business by 3.5% without any price benefit, then added a minor €713 million in new business to close with a nearly € 15.7 billion 1.1 book.
Modest price growth was attributed in part to the group's “conservative” inflation and loss-trend assumptions, including nat cat modelling, management said.
Property XoL delivered Munich Re its best pricing gain at 2.9% and Munich Re added 5.3% in volume.
“Munich Re continues to have capacity within its overall risk appetite for cat business in a healthy market environment,” management said, with note that the Aprila and mid-year books are comparatively nat cat heavy.
The proportional property book grew 4.1% in volume terms on fractional 0.3% pricing gains. Management said it had freely bid farewell to business that couldn't meet its hurdle rate while compensating by “growing with good prospects.”
Casualty appetite at 1.1 was split, with Munich Re slashing a mid-teens percentage sum from a proportional casualty book ex-auto where pricing was down in excess of 2%. Management cited “cautious loss-cost assumptions” in justifying the move, a repeat of cuts enacted at the prior year 1.1.
A proportional automotive reinsurance portfolio, in turn, was allowed to grow at mid-teens percentage rate as reinsurance pricing rose mildly to follow rate increases at the primary level, management said.
Combined, proportional casualty rose 3.3% in volume terms on a 0.8% price decline, management said.
Casualty XoL growth was trimmed to 5.7% rate after having been allowed to grow double digit the year prior. Risk- and inflation-adjusted pricing was said to have growth 1.0%.
Specialty lines suffered price declines approaching 2%, the rough view to a segment scatterplot showed, led by declines in marine. But lines were said to be "still highly profitable" and Munich Re held aggregate volumes stable as gains for the marine book offset declines in credit and aviation.
For its own outwards retrocession, Munich Re claimed to have increased its maximum in-force protection across its four major nat cat scenarios.
Traditional retro programs added neighbourhood $600 million on a "more favourable marketplace." Sidecar programmes grew to almost $650 million from $513 million the year prior. And Munich Re had already put a cat bond in play for $300 million against US hurricane.
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