Reinsurance firm Swiss Re has pulled back significantly on underwriting in China, blaming that market a leading driver of an 18% reduction in premium volume renewed on January 1st 2017.
Swiss Re only renewed $8.5 billion of premiums at the latest 1/1 reinsurance renewal, down 18% from the $10.3 billion underwritten the year before.
The reinsurer said that its pull-back was driven by disciplined underwriting and reductions in capacity across almost all segments of its business.
In particular, Swiss Re said that it had pulled back from Chinese quota share business, as the China Risk Oriented Solvency System (C-ROSS) regulation has made this less attractive for it.
At the same time, on the reinsurance business renewed, Swiss Re said that the price quality achieved on the business it underwrote dropped again, falling to just 101% of the hurdle rate that the reinsurer deems attractive.
In the prior year pricing was at 102%. The targeted 100% enables Swiss Re to achieve its targeted Group ROE of 700bp above risk free over the cycle.
As pricing continues to decline, having to pull-back from a major growth market is not ideal for reinsurers, but as we wrote recently this is a trend being seen across many reinsurers at recent renewals, so Swiss Re is not alone here.