March 25 (Bloomberg) -- Allianz Re, the reinsurance arm of Allianz SE, sees “a lot of capacity” in the market, while it expects prices to remain stable when premiums are renewed in April.
“We see a lot of capacity across the board,” Amer Ahmed, chief executive officer of Allianz Re, said in an interview in Dublin. “The big renewals in April will be in Japan and Korea and the sense we have is rather stable.”
Reinsurers, which help primary insurers shoulder risks in return for a share of the premiums, accumulated a record $500 billion of capital by the end of 2012, pushing supply by more than 10 percent, according to a report by Aon Benfield, the largest reinsurance broker. After last year’s lower losses and higher investment income, 2013’s prices are expected to remain unchanged and low interest rates may weigh on earnings, it said.
Allianz Re posted an operating profit of “just over 400 million euros ($514 million)” in 2012, Ahmed said. With low losses from natural catastrophes, last year was “very favorable,” while Hurricane Sandy was not “significant” for Allianz Re, he said.
Allianz Re, which gets “a little bit more than” 80 percent of its business from other units of Munich-based Allianz, began to clean up its third-party reinsurance business last year to boost profitability.
“As a group we still spend a significant amount of reinsurance euros outside,” he said. “We still have opportunities to do more there.”
Currently 40 percent of the business Allianz, Europe’s biggest insurer, has insured is picked up by Allianz Re, Ahmed said.
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