SFCRs reveal latest ceding levels for property insurers

Published in: Risk, Risk management, Cat risk, Corporate strategy, Reinsurance, UK, Rest of Europe

Companies: Insurance Risk Data, Lloyd's, Catlin Underwriting, AM Trust, Allianz, Aviva

Europe's most enthusiastic buyers of reinsurance for fire and other damage to property ceded on average half their premium volumes coming into 2017, before natural disasters turned the line of business toxic.

The nine underwriters that had handed risk to reinsurers in the greatest abundance (€10.7bn in premiums) for 2016, then palmed off €11bn more of it last year, against having written €21.2bn of business.

In 2017 they ceded slightly less as a proportion of gross written premiums (50%) than they had in 2016 (53.4%).

The 2016 underwriting year showed the top-heavy nature of the market in Europe of insurers taking out property reinsurance.

Some 543 EEA-headquartered underwriters purchased some reinsurance having written cover against fire and other damage to property.

But just eight groups were responsible for more than one-third of all the €29.2bn of reinsurance purchased, according to analysis of the Insurance Risk Data database.

In 2016, Lloyd's ceded the most (€2.3bn) followed by three Allianz group entities (€2.2bn) and Aviva (€1.91bn).

The latter two insurers make extensive use of intra-group reinsurance "mixers" to improve fungibility of capital and gain diversification benefits.

For Allianz in 2017, this included €4.3bn of quota share contracts between Allianz Versicherungs AG and Allianz SE. This exceeded 5% of the group's solvency capital requirement, and so rated specific mention in its solvency and financial condition report.

Combined ratios of many P&C underwriters still jumped sharply last year, with or without reinsurance, thanks to the costliest natural catastrophe (natcat) season ever recorded.

In investor presentations, many underwriters trumpeted how much risk they had laid off to reinsurers as they contextualised how badly impacted their businesses had been by natcats in the US and Caribbean – and to note how much worse things could have been without reinsurance.

Numerous Lloyd's syndicates including those managed by Catlin Underwriting and AM Trust – to name just two – took this line.

The details in public Solvency II filings on insurance and reinsurance volumes and habits do not segment how much of the reinsurance that was taken out for 2017 attached to property that was flattened, inundated or incinerated by the second half's natcats.

But the details in 2016 reports did show the propensity of European P&C insurers to reduce their net risk in this important business line, which in total generated €94.1bn of gross written premiums.

  • All SFCRs and QRTs are available from InsuranceERM as part of our Insurance Risk Data service. This service combines European insurers' financial and regulatory filings, including the new Solvency II disclosures, into a single, comprehensive and user-friendly database ideal for market/peer analysis, research and benchmarking. To find out more please email [email protected] 

David Walker