While conditions in the non-life reinsurance market remain challenging, it is also a mixed picture overall with some rate increases being secured by reinsurers against a wider backdrop of rate declines, according to Hannover Re.
In comments made in relation to its second quarter results, the reinsurer said that in view of the soft market conditions, it is concentrating solely on preserving profitability and the quality of its portfolio in non-life reinsurance. Its premium volume for 2014 should remain broadly stable after adjustment for exchange rate effects, it said.
“The continued challenging state of the general business environment in non-life reinsurance was further demonstrated by the treaty renewals as at 1 June and 1 July 2014, when parts of the North American portfolio, agricultural risks and business from Latin America traditionally come up for renewal,” Hannover Re said.
“In US property business rate declines of between 5 percent and 10 percent were the norm under programmes that had been spared losses; on the other hand, price increases of up to 30 percent were obtained for loss-impacted treaties in some areas. Prices in US property catastrophe business softened appreciably, albeit less sharply than in the renewals of 1 January 2014. Competition in US casualty business was also fiercer. All in all, the premium volume for North American business contracted slightly.
“Hannover Re is satisfied with the outcome of the renewals in Latin America. Growth in this market remains strong, even though modest rate declines were also recorded in Central and South America. The oversupply of reinsurance capacity was similarly evident in the renewal of part of the portfolio of agricultural risks. Hannover Re was nevertheless able to maintain its good positioning in this market.
“In view of the soft market conditions Hannover Re is concentrating solely on preserving the profitability and quality of its portfolio in non-life reinsurance. The premium volume for 2014 should remain broadly stable after adjustment for exchange rate effects.”
Hannover Re, Europe, Second Quarter 2014 Results