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(Reuters) — German reinsurer Munich Reinsurance Co. said it expects to generate more business as a result of the new Solvency II risk capital rules, which take effect Jan. 1.
The world's largest reinsurer said on Monday insurance companies would have to manage their capital requirements under the new rules and would turn to strongly capitalized reinsurers as partners.
"As a reinsurer with a very good rating, this is an advantage because the capital requirements for primary insurers will be lower than with other reinsurers," Munich Re Chief Risk Officer Bernhard Kaufmann said.
Many insurance companies, particularly life insurers, are still scrambling to make sure their systems and capital are up to the new rules when they come into force in four weeks' time.
Dutch insurer Delta Lloyd N.V. on Monday said it planned to raise €1 billion ($1.17 billion) through a rights issue to resolve doubts about its solvency level that contributed to a slump in its share price earlier in the year.
Reinsurers help insurance company clients shoulder the risk of big claims such as for hurricanes or earthquakes in exchange for part of the premium. Insurers can lighten the capital burden of counterparty default risk under Solvency II by working with a strong reinsurer, or by shifting catastrophe risk to it, for example.
Munich Re calculated its economic solvency ratio, which compares its capital on hand with the amount of buffer the rules say it should hold for the risks on its books, at 260% as at the end of the third quarter. Peer Hannover Re S.E. has said it wants to keep its Solvency II ratio above 200%.
Solvency II is one of several new areas, including cyber insurance and consulting services, helping to generate a total of around €400 million ($423.8 million) in annual premiums for Munich Re.
(Reuters) — German reinsurer Munich Reinsurance Co. stuck to its full-year earnings forecast after posting a worse-than-expected 30% drop in third-quarter net profit due to writedowns on equities and derivatives.