Hannover Re said it achieved better rates on average in Jan. 1 renewals than the previous year, as property catastrophe treaties saw big gains following the record catastrophe losses of 2011 while casualty rates held steady.
Chief Executive Ulrich Wallin cautioned, however, that "it is still too soon to speak of a hard market across the board in non-life reinsurance."
The reinsurers said 3.48 billion euros (US$4.6 billion) were up for renewal on Jan. 1, about 63% of the 5.5 billion euros in total premium volume booked in the previous year — excluding facultative business and structured reinsurance. Of that, 3.13 billion euros was renewed, while treaties worth 347 million were either cancelled or renewed in modified form.
With increases of 563 million euros from new or modified treaties and improved prices, total renewed premium volume was 3.69 billion euros, up 6% from the previous year.
Renewals in Germany were better than expected, as "persistent premium erosion" ended in the motor business, said Hannover Re. Hail events in August and September 2011 and losses from prior years helped to push premiums higher. Total premium volume for Germany rose 3%, due in part to an enlarged customer base.
In North America the treaty, nearly 50% of the portfolio was up for renewal. "In U.S. property business it was for the most part possible to obtain higher rates," the reinsurer said. Price increases of up to 30% were attainable for loss-hit programs.
Hannover Re said rate erosion "was halted" In U.S. casualty business. In Canada, "on the whole sizeable rate increases were secured." Premium volume for total business in North America rose about 7%.
Treaty renewal rates in marine business were largely stable, according to Hannover Re. In the offshore energy sector, Hannover Re booked rate increases it said were "considerable" under programs that had suffered losses. The company boosted its premium volume by 12% in treaty renewals.
Aviation reinsurance rate erosion was seen in both primary insurance and rensurance due to good underwriting results in prior years. "The business nevertheless continues to be attractive, prompting the company to enlarge its premium volume," said Hannover Re.
For credit and surety reinsurance, where about 75% of the portfolio was renewed, rates declined slightly due to good loss ratios seen in recent years. Premium volume rose on larger shares written with key accounts.
In global reinsurance business total premium volume grew by 8%. "In developed markets, the portfolio remained broadly stable, while in Asia and the Middle East, further appreciable growth was booked," the reinsurer said. "The most marked changes were observed in property catastrophe business.
In light of the substantial loss expenditure from natural catastrophes in the previous year, prices for reinsurance covers improved significantly."
Prices rose 60% on average In Australia, and there was a lower double-digit increase in the United States. Hannover Re said it is looking for further sizeable rate increases for the April 1 renewals in Japan and in the New Zealand renewals.
Looking ahead to 2012, Hannover Re said it anticipates a good financial year in non-life reinsurance. "We also expect to see further rate increases in the treaty renewals during 2012, when a good third of our non-life reinsurance portfolio is renegotiated," said Wallin. "All in all, we should enjoy continued profitable growth."
The reinsurer said it budgeted 560 million euros for major losses incurred in the current financial year, compared with 530 million euros in the previous year. "This increase reflects inter alia the enlarged premium volume in non-life reinsurance and the rise in insured values," Hannover Re said.
In November, A.M. Best Europe — Rating Services Ltd. affirmed the financial strength rating of A (Excellent) and issuer credit ratings of a+ of Hannover Rueckversicherung AG (Germany) and its subsidiaries. At the same time, A.M. Best affirmed the debt ratings of Hannover Finance (Luxembourg) S.A. (Luxembourg), which are either issued or guaranteed by Hannover Re. The outlook for all ratings remains positive.