” Cat organization is a highly volatile business however its a lucrative business long term,” Jurecka discussed. “What we do to remain on top of this is change our designs. On the one hand we include data on environment modification and the other we utilize the newest scientific details.”
Given the heavy disaster loss activity and the challenges this has positioned on some alternative capital market gamers, it is too early to inform how the retrocessional reinsurance renewals may turn out, according to Munich Re CFO Christoph Jurecka.Speaking this early morning throughout a media call, Jurecka explained that he is positive on the potential for rate increases at the January 2022 reinsurance renewals and stated that catastrophe risks stay an appealing proposition for Munich Re, but noted that rates requires to maintain pace with disaster and climate trends.
Inquired about the Munich Re on disaster threat pricing adequacy under the shadow of environment modification, Jurecka described that the diversifying nature of cat threat, versus other areas of the reinsurance companies book, do make it appealing.
However that isnt at any cost, so rates need to stay commensurate with the risks being assumed.
” Cat business is an extremely unstable organization but its a lucrative service long term,” Jurecka described. “What we do to remain on top of this is change our designs. On the one hand we include information on climate change and the other we use the current clinical details.”
Continuing to say that, “In underwriting, were focusing a lot on rate adequacy, as what we believe is very crucial is getting a fair market value.”
He explained that property catastrophe underwriting remains “a really crucial organization for a global reinsurer” going on to state that as “we have the possibility to reprice the organization every year … we believe its a really healthy business for us overall.”
Looking towards the January 2022 renewal season, Jurecka said that, “I continue to be positive for the pricing environment going forwards.”
However when asked on how the retrocession renewals may work out, offered the trapping of capital at a few of the larger collateralised market gamers, Jurecka would not yet be drawn.
” Its a little early to tell, as theres still a long time to go.
” I wouldnt be shocked, provided the loss activity weve seen, if this would have an influence on the alternative capital markets in general. Actually what this might indicate, I believe its a bit early to comment.”
This aligns with market sources who state retrocession renewals are already looking very late which the generally early retro renewals, including SCORs, have mainly met with some feedback that has actually triggered a rethink and restructuring to be carried out.
Munich Re does utilize retrocession, in addition to its own quota share collateralised reinsurance sidecar cars, so will be watching market conditions and the availability of capital in the retro market closely.
Jureckas comments on rate adequacy indicate that Munich Re is most likely anticipating some more cost increases in catastrophe exposed organization at 1/1, which recommends the company will continue to take this chance to grow its book further in 2022.