World’s two largest reinsurers positive about firming prices

Swiss Re is positive about pricing as it sees higher demand for catastrophe cover in Australia, New Zealand and the US, saying that the reinsurance market has started to turn. Swiss Re, announcing its interim results, says that it posted an increase of 18% in profit for the first half of the year to US$ 960 million.  At the same time, the world’s biggest reinsurer, Munich Re returned to the black in the second quarter with a profit of EUR 738 million (US$ 1.06 billion), following very high claims costs for natural catastrophes in the first quarter of this year. For the first half year overall, Munich Re still posted a consolidated loss of EUR 210 million, compared with a profit of EUR 1.19 billion in the same period last year.

The absence of big natural catastrophes between April and June helped the two reinsurers which faced an unusually high disaster bill in the first quarter, partly because of the 11 March earthquake and tsunami in Japan. Swiss Re has reported a US$ 2.3 billion loss from catastrophes and large claim losses in the first half of the year while Munich Re says that losses from natural catastrophes totalled around EUR 3.36 billion in the first half-year.“Swiss Re’s future growth prospects have been underscored by our strong July 2011 renewals, during which we benefited from the gradual firming of pricing,” the Zurich-headquartered reinsurer says in a statement.

“The reinsurance market has started to turn, and Swiss Re expects further improvements over the next six to 18 months.”

Munich Re, despite the first-quarter loss, expects to be profitable for the full 2011 financial year. Torsten Jeworrek, Munich Re’s reinsurance CEO, said: “The claims burdens in the first quarter already had an impact on the negotiations for treaty renewals at 1 July. These effects should also have an appreciable influence on the renewals at 1 January 2012.

With our capital strength, we regard ourselves as being in a good position to provide sufficient capacity in a market environment of rising prices.”