Joachim Wenning, Chief Executive Officer (CEO) of global reinsurer Munich Re, said this morning that there is no soft market in property catastrophe reinsurance, rather the period of no major losses for reinsurance companies is over.

joachim-wenning-ceo-munich-reAddressing the media after the release of a strong set of quarterly and half year results, Munich Re’s CEO was quizzed on how much buffer there is before property cat reinsurance becomes unattractive, in light of the reinsurer reporting a 3.2% dip in business volume at the July renewals and a 2.5% price decrease.

“I think the questions suggests that you assume that we are coming from a very high price level, which we did have, and that we’re coming down to a pain point. That’s not what I’m seeing,” said Wenning. “What I am seeing is that there is a margin reduction at a minuscule level, and this year, that was a little bit more than 1%, like I’ve mentioned in my report. If you actively manage your portfolio according to risk and income, like we’re doing, of course, and we actually see a stabilisation on this level.”

Across the three main renewal periods in 2025 (January, April, mid-year), Munich R’s reinsurance portfolio has experienced a 1.2% decline in prices, but while this points to softening, Wenning stressed that the market is not soft.

“The so called soft market, you can write about this, you can read about this. There is no soft market. Instead, the phases where there were no major losses for reinsurance companies, that time is over. Every year is full of major losses, and that, of course, has a price, and that alone will prevent prices from slipping too much,” he said.

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“Second, the so called alternative capital that I keep reading about, that there’s now so much new capital, I keep reading about this. But the fact is, there’s almost no new alternative capital, or if anything, it’s coming in at the speed where all the markets are growing as well,” added Wenning.

The CEO went on to highlight that maturing catastrophe bonds are being replaced but noted that this doesn’t increase the overall inventory.

“So, the alleged large or significant price pressure from that side is also simply non-existent,” said Wenning.

Adding: “The historic soft markets have also been supported occasionally by primary and reinsurance companies becoming a little bit more open to risks due to larger reserve payouts. Just because of US casualty, if you think of social inflation, if you think of PFAs. So, there are many reasons as to why the market is dealing with smaller movements, quite rationally, I believe. But, like I said, active portfolio management is still contributing to a very positive business case.”

 

Fuente: Reinsurance News

Enlace: https://www.reinsurancene.ws/property-cat-isnt-approaching-a-pain-point-there-is-no-soft-market-says-munich-res-wenning/