Reinsurance rates down at renewal as competition remains 'intense'
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Rates for nonproportional reinsurance that renewed on Jan. 1 fell by 2.8% on average, while competition remains intense for the sector, according to Hannover Re S.E.
Jürgen Gräber, member of the reinsurer's executive board with responsibility for nonlife reinsurance, said during a call with analysts Wednesday that “competition continued to be intense” at the Jan. 1 renewal.
The trend of cedents retaining more risk and competition from alternative capital sources continued at the renewal, Hannover Re CEO Ulrich Wallin said.
One of the most disappointing experiences in the renewal for reinsurers was the average rate decrease of about 7.3% for aviation treaties, despite a slew of aviation losses in 2014, Mr. Graber added.
But Mr. Gräber said that while there was continued rate softening across many lines, Hannover Re generally had been satisfied with the terms and conditions of the treaties it renewed at Jan. 1.
The only notable weakening of terms and conditions from the reinsurer's point of view at Jan. 1 was a broadening of hours clauses for property catastrophe treaties for risks such as flood, he said.
Hannover Re said that for U.S. nonproportional treaty reinsurance business that renewed at Jan. 1, it saw an average rate decrease of 3.5%.
U.S. catastrophe business saw rate reductions between 5% and 10% on average, Hannover Re noted.
Hannover Re said that rates for marine reinsurance treaties fell by about 1.9% at Jan. 1.
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