NEWS
European retentions must still increase: Mapfre Re
The property-cat market underwent a major change in the US in the last renewal, but in Europe there is work to do.
Once again Europe trailed trends set in the US—this time, to the detriment of European property-cat reinsurers. The 2023 reset might not be complete on the continent: reinsurers may have finished only 75 to 80 percent of the job.
That is the view of Mark Meyerhoff, Mapfre Re’s chief regional officer, Europe, who comes to Baden-Baden with a list of European geographies qualifying as unfinished business.
Yes, reinsurers globally are showing much improved loss ratios after the mid-double-digit hike in rates and the massive hike in retentions that cut out of the frequency losses.
“But for Europe that’s not true any more, after the summer losses,” Meyerhoff told Baden-Baden Today. “Results are heading into the red, mainly on the high frequency of smaller events. Most of the work is done, but Europe still has potential for improvement. We did maybe 75 or 80 percent of the work last year.”
The accumulation of mid-sized events has proved the point that more is to be done, including on retention levels, where increases have not matched what occurred in the US.
“We have to talk about attachment point levels again.”
Mark Meyerhoff, Mapfre Re
“We have to talk about attachment point levels again,” Meyerhoff said. “We’ll talk about what is doable and acceptable for clients and what makes sense from an economic perspective, but bear in mind that the trend in small and mid-sized events is increasing.”
Some change can be felt in the air. Meyerhoff suggests that several major frequency covers underpinning the German market are not going to be renewed, and programmes face some structural changes.
Italy is also on the list of unfinished business amid widespread reinsurer belief that the nation was overly spared the hike in retentions one year ago.
“The market did not react as expected at the last renewal and now Italy is facing a very harsh renewal,” Meyerhoff suggested.
All this comes as cedants are in search of ever-higher limit, he notes. Meyerhoff sees strong supporting evidence of industry estimates of $5 billion in added demand for the 2023 renewals, as meetings with German cedants universally showed rises of $50 to $100 million in added demand across the board.
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