FRANKFURT (Reuters) – A slump in reinsurance prices is playing to the strengths of the biggest global reinsurers, while piling pressure on smaller competitors to diversify or consolidate.
Reinsurers, which help insurers shoulder risk in exchange for part of the profit, this month unveiled the results of talks with insurance company customers to renew contracts for the start of 2014, amid what analysts are calling the biggest market-wide price decline since the late 1990s.
The results showed that reinsurance suppliers were separating into tiers, with larger and diversified companies such as Munich Re, Hannover Re and Swiss Re faring much better than smaller and narrowly-focused firms, which are likely to struggle to meet return on equity targets, according to industry executives and brokers.
“It's a tough market for all but the larger two groups, the top two tiers of reinsurers, are probably doing disproportionately better,” Swiss Re Chief Financial Officer George Quinn told Reuters.
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