Swiss Re: We, as an industry, have to generate profit within our insurance business

20 November 2019 — team
As we're heading towards 2020, the re/insurance industry evaluates the challenges and the evolution ahead. Swiss Re, for example, considers that the asset side will no longer have an impact. There is, also, the threat of inadequate pricing, mostly in the CEE countries.

"I think, looking at the macro environment we are in as a financial industry, one of the key challenges for us as insurance and reinsurance is clearly that the asset side will no longer contribute in any form of significant to our overall margins on the business. We, as an industry, need to make sure that we generate profits within our insurance business, because the asset side will not help us on mitigating deficiencies in insurance results", states Christian KREUTZER - Market Head ACEE & Transaction Lead NCEE, Swiss Re.

"It is crucial, from the underwriting side, that the underlining exposures we are taking in our books, both on treaty and facultative, are adequately priced. And, when I look at the facultative business, from CEE in particular, I often see inadequate premiums in almost all markets", also highlights Ralf MULLER - Head Facultative Property & Casualty CEE, Swiss Re.

Swiss Re believes that this renewal season will be affected not only by the inadequate pricing, but also by low yields and the current situation in the CEE countries.

"I already mentioned the topic of low yields, which will have an impact on insurance prices, both on the original markets but also on the reinsurance side, specifically on long term line of businesses, where the discounting impact is a significant element of the overall price calculation and, therefore, this is clearly something which will need to be reflected in market conditions going forward. Other than that, in CEE, we have a situation where the loss activity, specifically in the property area, has been relatively benign for the last couple of years. And, therefore, most of our portfolios are running on a profitable level. We'd rather talk to clients about how can we further grow their portfolios together with them and generate more business value for them and for us, on the current level of profitability in the markets", says Christian KREUTZER.

"In the facultative business, we are currently observing, hardening, in particular in mature markets, like Germany, Austria, or Netherlands, and this hardening is resulting in double digit price increases already, even for non-loss affected accounts, for some highly exposed business, like downstream energy, where the rates are up 20-30-40%. That's amazing and it reminds me about the situation we had 15 years ago. So, that said, we also expect a kind of hardening for large corporate business in CEE, in particular for those accounts that are currently not priced adequately", also states Ralf MULLER.

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