Litmus’ mid-year Reinsurer Renewal Roundup highlights diverging outcomes for the big 4

  • Continued price firming evident across the market
  • Diverging outcomes for the big four reinsurers

An examination of the P&C treaty renewals of the big four European reinsurance groups

Lewis Phillips
Consultant Analyst

  • With around 40% of global P&C reinsurance premiums, the four major European reinsurance groups are a bellwether for the market 
  • The four companies renewed EUR 13bn of P&C treaty gross premiums at mid-year 2022 compared with EUR 12bn at mid-year 2021.
  • In aggregate, renewed premiums grew 5% at mid-year 2022, with growth in premiums recorded by Hannover Re and Munich Re partly offset by reductions at SCOR and Swiss Re.
  • Premium rate increases maintained an upward trend through the year, with mid-year price rises ranging from flat at Munich Re to up 12% for Swiss Re

All references to premiums refer to gross premiums written.

Market bellwether

The big four European reinsurance groups account for some 40% of global P&C reinsurance premiums, according to data from A.M. Best, and are a bellwether for the market as a whole.

The four companies provide commentary on the mid-year renewals with their half year results. In this brief report, we examine their public disclosures, and have aggregated the four to present a composite picture.

North America and Asia dominate

Mid-year reinsurance renewals are dominated by business from North America and Asia Pacific (notably Australia) and Natural Catastrophe is an important feature of this renewal period. Overall, some 80% of treaty renewals have been completed by this time of the year.

Diverging volumes

Two of the companies, Hannover Re and Munich Re, took advantage of firming market conditions to grow their book at the recent mid-year treaty renewals. Swiss Re’s renewing book contracted while SCOR focused on underwriting discipline with a 10% decrease in renewed business. All companies pointed to continuing favourable price momentum and better terms on renewed business.

Sources: Company disclosures, Litmus Analysis.
Swiss Re reports in US dollars; for the purpose of this aggregation, its figures have been converted into euros using the prevailing exchange rate for the period.

Aggregate premium volume up 5% with average pricing up 5.8%

The four companies renewed some EUR 13bn of gross treaty premiums in aggregate at mid-year 2022, with growth of 5% and an average risk-adjusted price increase of 5.8%. This compares to growth of 11% and an average price increase of 2.1% achieved at mid-year 2021.

The change in renewed premium volume at mid-year 2022 ranged from SCOR’s 10% reduction to growth of 20% at Hannover Re.

Munich Re saw average risk-adjusted premium rates flat, while Swiss Re achieved price rises of an average 12%. Hannover Re’s average pricing was up 4.0% while SCOR reported an average 6.7% price increase.

(Swiss Re’s commentary is mostly provided on a year-to-date basis. Litmus Analysis has derived the results of the discrete period from previously disclosed renewals data at January and April renewals.)

Premium growth slows at mid-year renewal

Compared with 1 April renewals, growth in renewed premium volume slowed at mid-year 2022 for the group as a whole and for all the constituent companies. For the group as a whole and for each company other than Hannover Re, growth at this renewal lagged that at mid-year 2021.

Portfolio restructuring crimps SCOR’s mid-year renewal

The chart below shows the outcome, in terms of premium growth, for each company and the aggregate at each of the major renewal periods over the last three years. At mid-year 2022, the group as a whole achieved a 5% increase in premiums at renewal, but SCOR reduced its renewing book by 10% as it implemented portfolio restructuring actions, and Swiss Re said its focus on profitable growth was the driver of an estimated reduction of 3% in renewed premiums.

Swiss Re raised prices 12% at 1 July

Premium rate increases maintained a broadly upwards trajectory through 2022 to date, influenced by a 12% increase achieved by Swiss Re at mid-year 2022. Munich Re’s reported price increases have been consistently below those reported by the other companies.

Rate rises dampened at 1 April

Looking again at the individual results over the period, a declining trend is evident through the first quarter to the 1 April 2022 renewals, before picking up again to the mid-year.

Some caution is necessary in looking at these trends which are influenced both by underling price movements and variations in the business mix at the different periods.

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