Big reinsurers shrug off competition from pension funds

Mon Sep 9, 2013 6:16am EDT
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By Jonathan Gould and Alice Baghdjian

FRANKFURT/ZURICH (Reuters) - The world's top reinsurers have shrugged off a growing incursion by pension funds into their business, saying the competition was narrowly focused and possibly of limited duration.

Munich Re (MUVGn.DE: Quote), Swiss Re SRENH.VX and Hannover Re (HNRGn.DE: Quote) all cited growing margin pressure, particularly for hurricane protection in the United States, from institutional investors who are pumping billions of dollars into the market of natural catastrophe securitization.

But the three reinsurers said they were not challenged by the arrival of these so-called alternative investors and were confident of achieving satisfactory prices and conditions when next year's contracts with their insurance company clients are renewed in coming weeks.

"We take the inflow of alternative capital seriously, but we are not alarmed by it," Swiss Re's chief underwriting officer Matthias Weber said on Monday.

At Munich Re, board member Torsten Jeworrek told a news conference at the annual meeting of the reinsurance industry in Monaco: "The general impact is manageable and one should not exaggerate.

Swiss Re said it expected prices for natural catastrophe cover to decrease in the short term but stabilize in 2014.

Munich Re share rose 3.4 percent by 0900 GMT, helped by Bank of America Merrill Lynch raising its recommendation on the stock to "buy" from "neutral," according to traders.

Swiss Re stock rose 2 percent and Hannover Re rose 1.8 percent.   Continued...

File photo of books of world's biggest reinsurer, Munich RE (Muenchener Rueck) pictured in a Munich Re office building in Munich November 5, 2012. REUTERS/Michaela Rehle/Files