Premium growth in the first nine months of 2022 has been driven by global reinsurers, says reinsurance broker Gallagher Re in a new analysis.
The firm said that the (re)insurers it tracked reported YOY premium growth of 13% by Q3, but the strongest increases came from global reinsurers and reached 18.2%.
It said that premium increases by Hannover Re (28.9%), Munich Re (25.9%), and SCOR (19.9%) were supported by growth in traditional treaty and structured reinsurance business and benefitted from an FX tailwind due to the strong US dollar (all three report in Euros). In addition to organic growth, Intact’s 25.4% increase in premium at 9M 2022 was supported by its acquisition of RSA’s Canadian and UK operations.
The firm also said that seventeen of the twenty-five companies in its dataset reported YOY double-digit premium growth.
It wrote: “Earnings call commentary on pricing was similar to the half-year position; commercial lines continue to benefit from rate increases, albeit at a slowing pace, and margin expansion is typically expected into 2023. Personal lines business is much more challenged with several management teams noting that higher rate increases are needed to outpace claims inflation.”
Elsewhere, Gallagher Re said that Q3 2022 underwriting results were weakened and there remained still some challenges.
“Increased loss activity in Q3 2022,” it wrote “resulted in a higher average combined ratio of 102.1%, up 3.3% points from Q3 2021. During the quarter, results were mixed with just over half of (re)insurers reporting sub-100% combined ratios. SCOR. Swiss Re and MS&AD reported the most significant deterioration in their combined ratios, stemming largely from natural catastrophe loss activity (including Hurricane Ian), and reserving increases related to social and economic inflation. MS&AD was also impacted by large hail and typhoon events, as well as losses from COVID- 19 and those related to the Russia-Ukraine War.”
Gallagher Re said that results remained strong on a nine-month basis with an average combined ratio of 96.9%, up from 95.5% at the same point in 2021. This was driven, it wrote, by more favourable performance in the first half of 2022.
It said that this level of profitability in 9M 2022 was supported by continued double-digit premium growth, modestly lower natural catastrophe loss activity (even with the impact from Hurricane Ian) for the overall 9M period, and a reduction in the expense ratio.
Profitability offsets included increases in the attritional loss ratio, partially due to a rise in personal lines loss trends, and prior year reserve development.