International reinsurer and Lloyd’s competitor, Munich Re, has today released results for the year ended 31 December 2013. These show an improved profit of €3.3 billion, up from €3.2 billion in 2012, despite a 2% fall in gross premiums. The reinsurance division, which accounts for just over half of the group’s premium income recorded a slightly worse combined ratio at 92.1%, up from 91% in 2012, but the insurance division delivered a better result, with combined ratio down from 98.7% to 97.2%. Investment returns were lower, although overall the group achieved a return on investments of 3.5%.

Reinsurance renewals at 1 January represent more than half of the group’s reinsurance writings (and hence more than 25% of the entire premium base). The market environment was described as competitive, with interest in the reinsurance sector increasingly being shown by non-traditional capital sources such as pension funds. This in turn has increased price competition from the traditional market for non-proportional business. This business, while a large part of the Lloyd’s account, is a less material part of the Munich Re’s book as it also writes substantial volumes of pro-rata reinsurance especially of European insurers. The company has announced a fall in reinsurance prices by an average of 1.5%.

The first of the Lloyd’s insurers to report will be Beazley, on Thursday 6 February. We expect that Lloyd’s insurers will be showing larger negative price movements for their reinsurance books. Munich Re adds that it expects the reinsurance renewals due at 1 April (including those of Japanese insurers) and at 1 July (principally US regional, Australian and Latin American insurers), which include more non-proportional business to be under pricing pressure.

The full press release can be found here