While it’s clear there will be downward pressure on prices at the upcoming January 1 reinsurance renewals, it remains unclear to what extent those attempts are successful, while the conversation continues to broaden with clients and brokers working to achieve changes on the T&C side, according to Andrew Buchanan, CFO of Munich Re.
Following its results announcement this morning, Munich Re’s CFO commented on the upcoming renewals during a media call. Although he was unable to predict a price change number given there’s some weeks to go until what’s been described by some as a very late renewal, he explained that each party is negotiating for what they would like to get out of the renewal.
“I think it’s clear that, given the strong supply of capital in the industry and the relatively low level of outlier losses that we saw in Q3… there will continue to be downward pressure on prices. I think what’s not clear is the extent to which those attempts are successful,” he said.
He went on to say that what is notable is the conversation has been broadening out a little bit.
“In some cases, clients and brokers are trying to achieve other changes in their programmes on the T&C side. And so, the emphasis and the focus shifts a little bit away from price,” said Buchanan. “I would love to be able to give you a much more price precise estimation, but I can’t. Other than to say it will again be a tough renewal.”
In terms of price levels, the CFO was positive on the P&C reinsurance outlook, stating that, in general, it is still adequately priced on a technical basis.
“So, it would not be right at this point to say that we are now in a soft market in the sense of business being written on a large scale in loss-making terms, or technically inadequate terms. I don’t think that would be right at this stage. I think people who study this closely would probably say that we are back to the price levels of 2021-ish, something like that. And that was not the depth, the low point of the previous soft market,” said the CFO.
“Also, to the best of my knowledge, the market continues to be disciplined and fact-based and professional. I’m not aware of, let’s say, highly aggressive or panicked behaviour on any signs,” he added.
