Europe 'big four' reinsurers target specialty growth

Europe’s Big Four reinsurers, Munich Re, Swiss Re, Hannover Re and SCOR, are seeking growth in specialty segments as they pursue diversification, an AM Best report says.

Areas targeted include cyber, marine, credit and surety where price increases achieved since 2018 allow for good returns, the report says.

“The growth in these lines is not solely opportunistic, because of good pricing, but also aimed at achieving increased levels of diversification and so lead to more stable earnings,” AM Best says.

A number of US and Bermudian reinsurers have stated an intention to curtail property catastrophe exposure, or even exit the line altogether, but Munich Re, Swiss Re and Hannover Re have a more positive view on the price adequacy and growth opportunities.

“The three reinsurers are aiming for targeted growth in this business, including in the US, supported by hardening conditions and premium rate increases, but with limited appetite for frequency layers and aggregate covers,” AM Best says.

“On the other hand, SCOR, the smallest of the Big Four, has announced that it plans to reduce its natural catastrophe exposure for the US and overall.”

On the life side, the pandemic has highlighted significant exposure to US mortality trends, with the groups seeking growth in other regions and products to create more balanced portfolios.

The combined operating ratio for the four improved from 103.9% in 2020 to 98.1% last year, benefitting from an absence of significant adverse development from covid losses.

The five-year average combined ratio remains elevated, reflecting a period with significant natural catastrophe and man-made losses.