Some reinsurance lines fail to meet cost-of-capital for Hannover Re, Munich Re

A few reinsurance lines are not meeting cost-of-capital for German reinsurers Hannover Re S.E. and Munich Re, Artemis.bm reports.

The reinsurers end up writing business at unprofitable levels as they subsidize some risks as diversifiers. Hannover Re said that its catastrophe underwriting portfolio is not likely to meet its cost-of-capital, while its specialty lines aviation is also less profitable. Munich Re said that its offshore marine reinsurance business is already below its cost-of-capital. A few catastrophe lines in Europe as well as other areas are unprofitable as standalone risks, added Munich Re.

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