Joachim Wenning, Chair of the Board of Management at Munich Re, has suggested that the January renewals showed that the firm is “clearly” the preferred reinsurer, citing reliability as an attribute that its clients appreciated.
In an address covering the firm’s 2022 results, Wenning noted that Munich Re’s risk appetite and price expectations were communicated to the market long before the renewals and that the firm did not reduce capacity or announce any “rude awakenings.”
Munich Re says that it was able to increase written business volume to €15.3 billion at the January 2023 reinsurance renewals. The firm reduced the share of proportional business and grew in non-proportional natural catastrophe covers in particular.
The firm grew in nat cat property XoL by 40% in terms of premium volumes. As a result of the growth in exposure, the firm has increased its major loss assumption to 14% of the combined ratio for 2023, which is a 1% rise.
The german reinsurer states that market discipline allowed typical soft market features to be eliminated and many reinsurance programmes to be restructured favourably. It also noted that it continues to have the capacity within its overall risk appetite for cat business in a healthy pricing environment.
Munich Re notes that the strong growth with a material price improvement is only partially reflected in a +2.3% overall price change as property XL only represents about 10% of the renewed portfolio in January.
Wenning said, “High nominal price increases were already necessary to compensate for inflation and loss trends, however, we were able to increase prices beyond that.
“The increase of 2.3% for our entire portfolio is therefore fully risk-adjusted and corresponds to a margin increase to the same amount. This includes material business mix effects of almost 1 percentage point. This is of course, especially for the non-proportional non-life business.
“We’ve also improved our quality, for example, the inclusion and exclusion of damages and claims. But this is also secondary risks and miscellaneous risks, which in the soft market are oftentimes covered as well.”
Wenning continued, “The price increase of 2.3% all in all over the entire portfolio, underlines the attractiveness of the non-proportional property business, but doesn’t cover it entirely. The reason for this is that in the January renewals, this business is usually only weighted at around 10%.
“In the renewals that we’re facing throughout the year, for the first of April and the first of June and the first of July, this share of course increases, meaning this should also translate into the ongoing rate increases going forward.”
In its full year results, Munich Re reported that group-wide profit increased from more than €2.9 billion in 2021 to just over €3.4 billion, beating the guidance for the year by around €100 million.
The reinsurer’s profit for the fourth quarter of 2022 was €1.5 billion versus €871 million in the prior year period.
For the year, the operating result reached €3.6 billion compared with €3.5 billion in 2021, as the other non-operating result improved from -€91 million in 2021 to -€81 million in 2022.
Across the business, gross written premiums (GWP) increased by almost 13% to more than €67 billion.
Within its reinsurance business, property and casualty (P&C) contributed €1.9 billion to the 2022 result, which is down slightly from the previous year.
Premium volume expanded from €28.8 billion in 2021 to €34.4 billion in 2022.