During Munich Re’s Quarterly Statement Q3 2024 call, Chief Financial Officer (CFO) Christoph Jurecka expressed concerns about casualty pricing, describing it as too low and noting his surprise that prices haven’t risen more.
“Casualty is a continuously difficult market in our view,” said Jurecka. “The casualty prices we see in the market, I don’t think they’re adequate, they still aren’t, and they have not been for quite a number of years now. And I continue to be surprised by how rates do not move up more than what they do.”
As a result, he noted that Munich Re is adopting a cautious approach to underwriting in casualty.
Jurecka also discussed Munich Re’s reserves, describing them as strong and stable overall. Although the ongoing reserve review may reveal some areas needing adjustment, he emphasised that their reserve position remains solid.
“Our reserve review is still ongoing. I wouldn’t rule out pockets here and there where our actual versus expected is a little bit higher than where we want to have it. Therefore, for selected, smaller parts, potentially we will take some action. But, in our entire reserves overall, I would still continue to expect the run-off as expected of 5% positive reserve run-off,” he explained.
He added that not all parts of the portfolio perform equally, with some areas doing better than others.
“Casualty is clearly one of those areas which is tending to have higher actual versus expected, versus, for example, some of our property books, at least some portions of the casualty business,” Jurecka noted.
He also highlighted a recent shift in market focus toward more recent years, rather than just the “soft market” years.
He stated, “While in the past it was more about the soft market years, and everybody was worried about the reserve strength of the soft market. I think market wide, the younger years are getting more and more attention now as well, and I think in the course of the reserve review we will also have to look into these younger years a bit more.”
Jurecka concluded, “But again, altogether it’s a very stable situation, plus 5% reserve run-off is clearly the expectation, also for the five year, even given the bigger size of our book, so no concerns on our side when it comes to casualty.”
