Analysts at Fitch Ratings have observed differing approaches to managing natural catastrophe risks among the four major European reinsurers, following positive results for the group in 2021.
The rating agency notes that all four reinsurers benefitted from the favourable pricing environment in reinsurance so as to increase premium income by 10% on average during this year’s January renewals.
However, their growth strategies differed – in particular regarding the underwriting of natural catastrophe risks.
Hannover Re increased the relative weight of its catastrophe business and expanded premium volumes by 25% with a particular focus on Europe, Fitch observes.
And premium growth in the US was below average as Hannover Re remained cautious with regard to proportional property and casualty lines of business. The company also reduced its retro protection by roughly 25% as availability was tight and prices high.
Of the four, Munich Re had the strongest premium growth, balanced between quota share treaties in property and casualty, property excess-of-loss treaties, and specialty lines of business.
But the company did not grow its casualty excess-of-loss treaty book, because of comparatively unattractive margins, while the relative weight in the business portfolio of property catastrophe covers remained largely unchanged.
Next, Fitch highlights that SCOR was the only one of the European group to reduce its catastrophe exposure at the January 2022 renewals, shrinking it by around 7% as the company cut back on business received from US primary wind-exposed managing general agents, in particular.
In contrast, the reinsurer grew global lines, such as credit and surety or marine and energy, as well as its European casualty and motor lines. SCOR also maintained its retro cover while changing its structure as a new side-car capacity of €300 million was set up.
And finally, Fitch reports that Swiss Re grew the relative weight of its property catastrophe business again after reducing its exposure last year, with premiums increasing by 24% at renewal, while the company continued to avoid aggregate covers.
It is also worth noting that the reinsurer reduced the proportional EMEA motor book due to poor margins, Fitch added.
