Tailwinds for a widespread hard reinsurance market: Munich Re CFO Jurecka

Munich Re’s CFO Christoph Jurecka explained yesterday that the current situation in reinsurance provides the necessary tailwinds for a widespread hard market in 2023.

Having earlier in the day said that Munich Re believes recent hurricane Ian matches a pattern linked to a warming world and that this will have to be priced into reinsurance contract renewals in 2023 and beyond, Jurecka made additional comments on the reinsurers expectations for pricing during a later analyst call.

Jurecka explained that Munich Re is targeting reinsurance portfolio growth in the improving market conditions.

He said that, “The increase in the expectation for gross written premiums to EUR 67 billion for the Group is mainly driven by reinsurance, and the possible expansion of our business in the cause of the year.

“Overall, I believe our ambition to deliver on EUR 3.3 billion target is a strong commitment, given the challenging macroeconomic environment, another year of high natural catastrophe losses in the industry and the impact of the war in Ukraine.

“This environment should provide tailwinds for further rate increases next year, as Munich Re will be well positioned to capitalise on its superior market position.”

Asked about just how significant reinsurance rate hardening could be, Jurecka indicated that Munich Re believes the hard market will be a far-reaching affair.

“I think it’s of course early and we approach the 1/1 renewal in a couple of months,” said Jurecka. “But I think there are clear indications that we are talking about a wider-spread hard market, and this will not only affect selected lines or selected countries.”

He explained that recent claims experience, of course Hurricane Ian, but also “the situation in alternative capital and what we are seeing in that market,” are key drivers of the hardening reinsurance market trend.

Adding that, “I think we can be optimistic in that regard,” but also saying it’s still too early to tell just how hard the market will get.