Hannover Re became the first reinsurer to comment on its January 1 renewals with Chief Executive Ulrich Wallin saying he was “satisfied” with the treaty renewals completed.
Indeed the underwriter said it had maintained a disciplined stance with its pricing and said it had refused to renew underpriced business while also obtaining price rises in some areas.
“The renewals passed off better than expected for our company, despite softening tendencies in the market,” Mr Wallin added. “We achieved broadly stable rates and conditions and are therefore thoroughly satisfied with the outcome. In certain segments, such as offshore energy business and European motor liability, we were even able to push through price increases.”
Around two thirds of Hannover Re’s treaty business was up for renewal as of 1/1 worth altogether EUR 3.28 billion (67%). Of that total a premium volume of EUR 2.9 billion was renewed, while treaties worth EUR 284 million were either cancelled or restructured.
“Against the backdrop of more intense competition, we set particularly great store by selective underwriting of treaties. We were thus again able to generate profitable growth in this year's renewal phase,” Mr. Wallin explained.
Hannover Re added that financial strength was continuing to play a major part in the buying decisions of cedents.
“The treaty renewals again demonstrated the considerable importance that ceding companies continue to attach to a reinsurer's financial strength. A very good rating is a prerequisite for a reinsurer if it is to be offered and awarded the entire spectrum of business,” it said.
Looking towards the year ahead the underwriter said it was confident of further progress barring any major events.
'For 2011 we see sufficient opportunities for selective profitable growth. In this context we shall concentrate on segments where prices are rising or where they adequately reflect the risks,” Mr. Wallin added. “The company expects net premium earned from its total non-life reinsurance portfolio to remain stable or show modest growth of up to 3% in 2011 combined with healthy profitability.”
Hannover Re said it expects net premium in life and health reinsurance to record an increase in the range of 10% to 12% in the current financial year.
“For total business Hannover Re anticipates net premium growth of approximately 5% at constant exchange rates,” it added. “Assuming that the burden of major losses remains within the expected bounds and as long as there are no sharp downturns on capital markets, Hannover Re is looking to generate Group net income in the order of EUR 650 million. As to the dividend, the company still anticipates a payout in the range of 35% to 40% of its IFRS consolidated net income after tax.”