Hannover Re expects reinsurers to escape major losses from Hurricane Dorian, which has now left the extreme northeast of Canada and moved over the cold waters of the Labrador Sea.
Dorian earlier this month wrought devastating damage in parts of the Bahamas and over the weekend brought high winds and storm surge to areas along the mid-Atlantic US coast and the Outer Banks barrier islands in North Carolina.
At a press conference at the Monte Carlo Rendez-Vous, executive board member Sven Althoff said the storm was an insurance rather than reinsurance event.
“There are significant insurance deductibles and it would take significant water damage to erode them. Excess of loss structures will not be impacted,” he said.
In a pre-conference bulletin this morning Hannover Re had expressed optimism about the rate outlook, though kept its 2019 profit forecast intact.
Executives noted that in Florida there were rate improvements of more than 20 percent on loss-affected programmes, while otherwise they remained in the single digits.
While further price increases are dependent on the loss outlook, even without additional losses rates can be expected to rise within the single-digit percentage range in the US, the carrier added.
“Pricing is going in the right direction and pricing in the US will continue to improve,” CEO Jean-Jacques Henchoz told journalists.
Hannover Re will continue to write more US property risk as the rate increases continue, executive board member Michael Pickel said.
Non-proportional reinsurance is in a stable state, Hannover Re said, and further rate increases across primary insurance in the US are also anticipated.
The reinsurer expects significant price rises in the Japanese market to continue into 2020.
“We’ll see further rate increases in 2020 due to the poor Jebi run-off,” executive board member Silke Sehm said.
Typhoon Jebi also impacted the marine market and theses losses, combined with the Sassi superyacht fire at a shipyard in Bremen, northern Germany, helped make sharp increases in the Japanese renewals possible. They also helped to stabilise the marine market environment, Hannover Re said.
Lloyd’s crackdown on underperforming lines also meant there was a reduction in underwriting capacity for several lines of marine business. The reduction led to hardening in the primary marine market, the effect of which was prevalent in cargo insurance and yacht hull business.
Retrocession and capital markets chief Henning Ludolphs told journalists that the reinsurer’s fronting business had gained as a result of RenaissanceRe’s $1.5bn acquisition of Tokio Millennium Re.
Ludolphs said: “Historically there have only been three providers of fronting business. So when Tokio Millennium left we got additional business. Some of their clients came to us.”
Hannover Re, which is active in the cat bond space as well as fronting, will continue to use the ILS space, Sehm said.
“We want to maximise all opportunities we see in the market,” she said.