Jean-Jacques Henchoz, the Chief Executive Officer (CEO) of Hannover Re, said on the company’s earnings call yesterday that there’s no signs of a significant influx of capital entering the reinsurance market, with the current supply demand dynamics expected to persist.
“Generally, I think the momentum in the market has continued this year, and we haven’t seen any significant pockets of capital coming into the system, just very targeted at short tail U.S,” said Henchoz. “So, the supply demand equation will not fundamentally change in our view. So, we would expect continued price adjustment.”
Property and casualty (P&C) reinsurance rates continued to rise at the mid-year renewals, bringing improved rates and conditions for Hannover Re.
The reinsurer reported that during the renewals in P&C reinsurance this year its new business CSM (net) rose by 45% to €1.8 billion. At the July 1st renewals, further improvements in risk-adjusted prices and conditions were achieved, with renewed volume expanding bay 12.6% with an inflation and risk-adjusted price increase on renewed business of 4.8%.
“It’s fair to say that this year was probably more geared towards the shorter tail lines of business, and we hope to see further momentum on prices and conditions in the long tail business,” said Henchoz.
“But generally, I would say, a best estimate view at this stage, that ’24 will continue to be a very successful year from our point of view. And depending on the line of business, from stable to improving terms going forward, we don’t see any major shift in terms of capacity allocation in reinsurance,” he added.
The CEO went on to note that if this year is a very low nat cat year, “that might trigger some thinking among the finance community and we might see some emerging changes, but not of any significance, in my view. So, we’re very optimistic about 24.”
The Hannover Re CEO is the latest to note an expectation of continued favourable market conditions in reinsurance into 2024, with reinsurers seemingly continuing to exhibit disciplined underwriting as they look to make up for the prolonged soft market cycle in P&C.
Hannover Re reported an impressive set of results for H1 2023, with reinsurance revenue increasing by 3.9% to €12.3 billion.