After another year of more than $100 billion of insurance and reinsurance industry losses from natural catastrophes in 2023, and with no major influx of fresh capital, the hard market environment is expected to persist, according to Munich Re’s CEO Joachim Wenning.
This morning, the global reinsurer reported a strong set of financial results for 2023, as well as a strong outcome at the January 1 renewals with growth of 3.5% amid attractive business opportunities in nearly all regions and classes of business.
Following the release, management held a media call during which the outlook for future renewals and the longevity of the current hard market cycle was discussed.
Wenning highlighted the challenges and opportunities driven by the high level of industry catastrophe losses that occurred in 2023.
“Since no major new fresh capital flowed into the reinsurance market, and since we cannot see any competitor wanting to take a step back, we assume that the so called hard market is going to continue,” said Wenning.
Expanding on this, the CEO emphasised that while it’s difficult to say how long into the future the hard market will continue, internal optimism is that the renewals for the rest of the year, so April and June and July, “will certainly be as good as in January.”
In terms of conditions for 2025, though, Wenning stressed that this cannot be foreseen, adding that if the cycle is going up then at some point it will go down, although this is not something Munich Re observes at the moment.
One of the reasons for this is that in both the traditional reinsurance and alternative capital markets, there hasn’t been an influx of capital.
Regarding capital inflows from the traditional market, Wenning explained that were there to be a change, then of course, “the reinsurance companies themselves they might become softer, because they say okay, I want to take away this or that business from the other,” but, he added, “up until 2024, we don’t see a reason for that.”
