Some reinsurance lines no longer meeting cost-of-capital
Saturday, 02 06 2016, Category: Insurance and Reinsurance, Country: World
Some reinsurance lines are no longer meeting cost-of-capital for the world’s largest reinsurers, which sees the firms often writing business at levels which are technically unprofitable as they subsidise some risks as diversifiers.
Yesterday, Hannover Re executives explained that its catastrophe excess-of-loss underwriting portfolio was no longer anticipated to meet its cost-of-capital, while in specialty lines aviation is also less profitable now.
This morning Munich Re echoed this, saying that in lines such as offshore marine reinsurance it was already writing business at levels below its cost-of-capital, while some catastrophe lines in Europe and other diversifying areas are also unprofitable, as standalone risks.