Reinsurers return more capital on very strong 2021 results
Source: Middle East Insurance Review | Apr 2022
The four major European reinsurers – Hannover Re, Munich Re, SCOR and Swiss Re – improved their earnings significantly in 2021 due to better pricing and substantially lower coronavirus claims in property and casualty, Fitch Ratings said in a new report titled European Reinsurers’ Earnings Much Improved in 2021.
This strong increase in earnings allows reinsurers to overcompensate for a rise in excess mortality losses linked to COVID-19, above-average Nat CAT claims and a lower investment income. The capital position of the four improved further in 2021, so that three out of four reinsurers have decided to significantly increase capital returns to shareholders.
The reinsurance price increases across large parts of the business that were up for renewal in January 2022 were diminished compared to 2021 for all four major European reinsurers. US casualty, in particular, witnessed increased price pressure as more capital was allocated to this line of business. This trend is likely to spread to other lines of business in 2022 and 2023.
However, Fitch believes that the tailwinds from the hardening market environment are still strong enough in 2022 to counterbalance the mounting risks from economic inflation and heightened financial market volatility. Fitch also expects a relief for earnings that results from a significant decline in excess mortality claims in the absence of new relevant variants of the coronavirus in 2022. M