Property catastrophe rates should at a minimum hold steady at 1 January, but the Japanese renewals at 1 April will respond more decisively to this year’s losses, according to Hannover Re management board member Michael Pickel.
Pickel, who is responsible for North American and Continental European P&C target markets, as well as run-off solutions, said the cats “at least should have the impact that rates won’t go down”.
He added: “But the most critical reaction will be in April in Japan.”
Pickel predicted that European windstorm and flood losses will lead to more demand for aggregate cover.
He said insurers were waking up to the need for more reinsurance to smooth swings in earnings.
“Reinsurance is one of the key drivers to reduce volatility for shareholders,” he said. “Everyone sees that the share price suffers with a high frequency of losses.”
Hannover Re earlier this year sold its specialty primary insurance subsidiary to Talanx-backed sister company HDI through a merger which created HDI Global Specialty.
“We didn’t want to compete with clients of ours on the reinsurance side and we learned that we were not the best insurance guys. That led to the conclusion to sell it when we were offered a good price,” Pickel explained.
Pickel in March will become CEO of Hannover Re’s domestic German E+S Rückversicherung unit, replacing Ulrich Wallin, who is retiring from that position and that of Hannover Re group CEO.
At a press conference on Monday, Pickel predicted stronger demand for catastrophe covers at E+S Rück. He said rates would at least hold stable for programmes that were not impacted by losses, and reinsurers would see modest increases for those that were.
For German motor reinsurance, E+S Rück expects stable conditions for proportional treaties and rate increases in the mid-single-digit percentage range for non-proportional policies.
Pickel said Marsh & McLennan Companies’ £4.9bn ($6.4bn) takeover of JLT, which will strengthen Guy Carpenter’s position as the world’s leading reinsurance broker, will have a minimal impact on reinsurers.
But he said: “I’m not a fan – whenever a client goes away it is not positive. I like variety.”