Global reinsurance firm Hannover Re said that its E+S Rückversicherung AG unit, which looks after underwriting business in Germany, is expecting some reinsurance rates to increase at the January 2019 renewals.
The firm said that it continues to expect “positive premium development in the German market” at the next major reinsurance renewal season of January 2019, although this may be at a “more muted pace” than seen a year earlier.
“Against the backdrop of an increased number of small and mid-sized losses we do not see any room for concessions,” commented Dr. Michael Pickel, a member of the company’s Executive Board, during a press conference at the Baden-Baden industry event. “Adjustments are necessary under certain treaties, for example after reserve increases. For this reason we anticipate slightly higher reinsurance rates for the treaty renewals as at 1 January 2019.”
For natural catastrophe reinsurance business in Germany E+S Rück expects a modest rate increase, due to higher losses, and at least stable rates for reinsurance programs that were not impacted by these events.
Winter storm Friederike and a number of severe rainfall related loss events are unlikely to be sufficient to push reinsurance rates higher across the board in Germany, the firm said, noting that in many cases these losses were retained by primary insurers.
However, the company hopes this will continue the trend of ceding companies buying more natural catastrophe reinsurance protection and E+S Rück said that while these firms continue to review their protection, it “anticipates stronger demand for catastrophe covers,” at future renewals.
“We anticipate further attractive business opportunities in Germany for E+S Rück in 2019,” Pickel said. “It remains our goal to keep our market share on a high level and offer our clients innovative reinsurance solutions.”
Higher rates in Germany could translate into some more attractive underwriting opportunities for the major ILS funds. But overall competition in this market remains hard, given the low rates offered by traditional reinsurance giants which means European property catastrophe business is not always delivering sufficient returns to attract ILS capital.