Swiss Re Ltd., the world’s No. 2 reinsurer, is cutting back on catastrophe coverage and moving into new lines of business as low interest rates and fewer natural disasters undercut prices.
“The super profits from nat cat are probably over for now,” Christian Mumenthaler, head of SwissRe’s reinsurance business, said in an interview in Monte Carlo on Sept. 16.
Reinsurance prices dropped this year during each of the policy renewal periods in January, April and July, according to broker Guy Carpenter & Co., the seventh year in the past 10 that rates have slumped.
The soft market will continue while worsening terms and conditions will spread to new classes next year as the industry competes for business, said reinsurers and brokers gathered at their annual meeting in Monte Carlo. Swiss Re and competitor Hannover Re added they see price declines for natural catastrophe reinsurance slowing.
“My feeling is that this is the first year we hit technical limits in some of the business and therefore a few of the bigger players will cut business,” offering less coverage as they earn too little for the risks, Mumenthaler said.
He said it would take time to build up other lines of business to compensate for the falling prices.
Areas of growth for Swiss Re include casualty reinsurance as price levels, for instance in primary casualty in the U.S., are increasing. The company also sees growth from specialty lines like engineering, agriculture and marine insurance in countries including China, India, Indonesia, Brazil and Mexico, Matthias Weber, chief underwriting officer at Swiss Re, said in an interview on Sept. 16.
To contact the reporter on this story: Carolyn Bandel in Zurich at email@example.com To contact the editors responsible for this story: Mark Bentley at firstname.lastname@example.org Cindy Roberts, Steve Bailey