Hannover Re, the world’s third-largest reinsurer, said it expects reinsurance rates at price negotiations for January renewals to remain little changed.
Pricing will be “rather stable,” Chief Executive Officer Ulrich Wallin said at a briefing in Monte Carlo today. “We have pockets like German catastrophe business that will provide rate increases next year, others won’t. It’s very diverse.”
Munich Re, Swiss Re Ltd. and Hannover Re are among reinsurers meeting with brokers and their clients, primary insurers, in Monte Carlo to negotiate terms and conditions of next year’s property and casualty policies. The industry is under pressure to shore up earnings hurt by low interest rates as near-record capital available for coverage weighs on prices.
Reinsurers typically renew about two thirds of their annual property and casualty contracts in January. Wallin said that there’s not much leeway to lower prices, with low interest rates weighing on investment income.
Hannover Re said that insured losses from disasters affecting Germany this year including floods may add as much as 5 billion euros ($6.6 billion). It reiterated that it expects net income of about 800 million euros for this year.
The Hanover, Germany-based company will give details on claims related to hailstorms that hit Germany in June, July and August when it reports third-quarter results, the CEO said.
Shrinking U.S. property catastrophe margins have had a limited effect on the company’s business following a “disproportionately low” market share, the company said in a statement today. Wallin said he doesn’t expect a general weakening of contract terms and conditions next year.
Swiss Re, the world’s second-largest reinsurer, said earlier today it expects the price of natural-catastrophe reinsurance to stabilize in 2014 after a drop this year. Munich Re, the world’s biggest reinsurer, yesterday forecast stable rates in January. The July hailstorms are expected to cost 180 million euros, the company said.