FRANKFURT (Reuters) - Europe's reinsurers will soon test the strength of competition from alternative investors like pension funds, whose activity may keep a lid on reinsurance price rises and add to challenges for a sector already facing crimped investment income.
Reinsurers, including the world's top three players Munich Re, Swiss Re and Hannover RE, gather over the weekend in the German resort of Baden-Baden for annual contract talks with insurance companies, whom they help cover the cost of disasters in exchange for part of the profit.
They meet after flooding in central Europe in June and hailstone damage in southern Germanyin July prompted more than a million claims. According to a trade body, the sector faces a cost of about 4.5 billion euros ($6.2 billion) in Germany alone.
Such events would normally lead insurers and reinsurers to raise prices, but a supply of insurance from alternative sources like pension funds, which have been seeking higher yields by pouring money into investment vehicles that supply reinsurance, could hinder those efforts.
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