Hannover Re, the world’s fourth- biggest reinsurer, expects rates for property and casualty reinsurance to increase “slightly” when companies renew policies in January, Chief Executive Officer Ulrich Wallin said.
“All in all, it’s a stable to slightly up environment,” Wallin said at a press conference in Monte Carlo today. “While there is increased overcapacity in the reinsurance market, low interest rates and the general uncertainty will prevent reductions in rates.”
The industry is gathering for its annual meeting with brokers and their clients, primary insurers, in Monte Carlo to start negotiating terms and conditions of next year’s contracts. The talks will continue at an October meeting in Baden-Baden, Germany. Allianz SE, Axa SA (CS) and other primary insurers buy reinsurance to help them shoulder the costs of events such as natural disasters.
The German auto insurance market, Europe’s largest, which has been unprofitable since carriers stepped up price cuts to win business in 2005, is recovering, Hannover Re said. The company says it’s Germany’s biggest auto reinsurer.
“A significant recovery can be observed,” said Michael Pickel, a member of the management board who said he’s observing price increases of as much as 9 percent in the primary market.
The reinsurer will also “pay particular attention to the storm business in Germany,” Pickel said.
Hurricane Isaac, which made landfall in Louisiana on Aug. 28, is expected to cost Hannover Re a “low double-digit million-euro amount,” Wallin said. The storm may cost the industry as much as $2 billion, risk-modeling firm AIR Worldwide has said.
Munich Re, the world’s biggest reinsurer, yesterday said it expects property and casualty reinsurance rates to remain stable during the January price negotiations. The Munich-based reinsurer also said it expects “further rate adjustments” for windstorm policies in Europe. It said it expects its own claims from Isaac to be less than 100 million euros.
Hannover Re, whose majority shareholder Talanx AG plans an initial public offering by the end of September, last month posted a 13 percent decline in second-quarter profit to 144 million euros ($184 million) on losses from hedging derivatives. The Hanover, Germany-based company said it booked 82 million euros of losses in the second quarter after 85 million euros of gains in the preceding three months.
To contact the reporter on this story: Oliver Suess in Munich at email@example.com