The market is in a time of change, and PartnerRe Ltd. is expecting to see higher rates at the pivotal Jan. 1 renewal season, President and Chief Executive Officer Costas Miranthis said.
"We're in a transitional market," Miranthis said during a conference call to discuss the reinsurer's third-quarter earnings. "In the underlying market, we are seeing high single-digit [growth] in property in the U.S."
While that level of rate increase won't be the case everywhere, the psychology of renewals talks has changed, he said.
"When we sit down with cedants at renewals, none were talking about how price should decrease, but why price increases should be limited. That gives you a flavor about the situation we are in," Miranthis said.
About 55% to 60% of PartnerRe's nonlife book is up for renewal in January. Miranthis said he was expecting to see high single-digit to low double-digit increases on the company's return-on-equity levels related to its portfolio.
He said he did not expect to see any major shifts in the portfolio, but said the company had reduced its catastrophe exposure to 30% to 40% of its capital.
In August, PartnerRe Ltd. said it was reducing its catastrophe exposure as strategic decision, not the result of losses suffered this year or revisions to modeling software.
PartnerRe reported a 65% drop of third-quarter net income to $180.1 million down from $524.9 million for the same quarter a year ago. Revenue fell 16% to $1.48 billion from $1.77 billion.
The nonlife combined ratio widened to 93.1 from 80.7 a year ago. The 2011 quarter included 16.5 points related to net adverse prior-quarter loss development, primarily related to the Japan and New Zealand earthquakes, offset by 16.2 points of net favorable loss development on prior accident years.