Munich Re Believes Reinsurance Market Could Harden
In a statement released at the Baden-Baden, Germany, reinsurance renewal meeting on Monday, Munich Reinsurance Co. said it believes the current reinsurance market cycle is about to turn and said rates could increase by double-digit percentages.
The current financial turmoil is increasing demand for reinsurance, Munich Re said in its statement.
“To master the challenges connected with the financial crisis, primary insurance companies are more dependent than ever on reliable and financially resilient reinsurers as partners,” said Ludger Arnoldussen, a member of Munich Re’s board of management, in the statement.
He pointed out that since the Monte Carlo reinsurance meeting in early September, the world’s 10 largest reinsurers in terms of market capitalization alone have lost more than a quarter of their value.
“Quality and security have their price in reinsurance. In view of the increased cost of capital, the growing demand and the changed risk environment, we expect significantly higher prices, with percentage increases definitely going into the double-digit range,” he said. “Where Munich Re is unable to obtain the requisite prices, we will not write the business.”
Published on October 28, 2008
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