Allianz may tweak aggregate reinsurance levels at renewal: CFO Terzariol

Allianz intends to make some tweaks to its catastrophe reinsurance arrangements at the renewals, although overall its reinsurance arrangements are expected to remain fundamentally unchanged and changes are expected to be to the aggregate coverage, the insurers CFO Giulio Terzariol said yesterday.

Speaking after Allianz announced its results for the third-quarter and first nine-months of 2021, a period when the global insurer experienced significant catastrophe losses, Terzariol said he also expects some upwards pressure on reinsurance pricing when the renewal is completed.

As we explained yesterday, Allianz ceded a significant proportion of its losses from the European flooding in Q3 2021 to its reinsurance partners, possibly around the €700 million mark.

Allianz had previously revealed its gross losses from the flood would be around the €1.1 billion mark, with reinsurance likely picking up the majority for the company.

Then, in its results announcement, Allianz revealed its net loss from the flooding as being €400 million.

Additional losses were likely ceded related to hurricane Ida as well, so the insurers reinsurance program partners definitely proved their worth in the last quarter.

Asked about whether the loss experience would drive any strategic changes to Allianz’s reinsurance program arrangements, Terzariol said they won’t be significant, but that he is expecting prices to rise.

“We’ve been looking at our reinsurance structure, because clearly we know that there will be an increase in premium, in reinsurance premium, coming our way. So we have looked at different reinsurance structures.

“But at the end of the day we achieved the conclusion that our reinsurance program is pretty good. So we are comfortable with the program.”

One area that is set to receive some attention though, is Allianz’s aggregate reinsurance coverage, which Terzariol said might involve “some tweaking”.

“We might do some tweaking, to the aggregate level,” he said. “So that’s more about the attachment point, the capacity. But fundamentally we are not changing our reinsurance structure.”

He went on to explain his price expectations for the renewals, saying, “From a pricing point of view, I would say we are generally a very good account, so from that point of view, yes we expect to see some increases, but in our case, since we are a good account, increases should be more moderate.

“Anyway these are price increases that we are going to put into our calculations for our premiums. So from that point of view we have analysed different options, but eventually it’s going to be pretty much business as usual with respect to our reinsurance program, just with some tweaking.

“Right now we are going through the negotiations, so let’s see what comes out of them.”