Reinsurers stress risk selection in the face of competition

Commenting on January 1, 2005 renewals, French reinsurer Scor says pricing was fragmented by line of business and geography, with specific rate erosion in short-tail lines as competition increased in the marketplace.Overall, the company says it expects annual premium income of EUR940 million on its p&c treaties, a 3% drop at current exchange rates. However, Scor stresses it adhered to strict risk selection in accordance with previously launched plan to return the reinsurer to profitability.Of its experience, the company notes cedants were “generally tending towards increasing their retention”. However, in Canada, the company expects significant increase in its business. “Gross premiums written by Scor Canada on p&c treaties should increase by +14.8% (in Canadian dollars). This represents over half of North American p&c treaties,” notes a Scor release. “The group has initiated relationships with several clients and above all has increased its share on several existing treaties. Overall, rates have remained stable on this market.”The group has specifically chosen to focus on markets such as France, the U.K., Spain and Central Europe, where conditions are seen as more favorable. It has been more selective in the U.S., where it has chosen to focus on small to medium regional cedants.Bermuda-based reinsurer Partner Re says its January 1 renewals, which represent 60% of its non-life book, saw a 9% decline on a constant dollar basis. Taking in the full year of renewals and life and ART business, the company expects premiums to remain flat to down 5% for 2005.”We found the global markets to be somewhat more competitive than expected, but the U.S. remained at reasonable profitability levels in the majority of lines,” says CEO Patrick Thiele. He echoed the themes of rising cedant retentions and reinsurers’ adherence to strict risk selection. “While our financial strength and franchise allowed us to gain a fair amount of new business, approximately 17% of our renewable base was non-renewed as a result of cedants increasing their retention levels or our choosing to withdraw our support where terms and conditions did not meet our standards.”