Allianz and Generali: consolidated reinsurance buying hits purchase appetite

Insurance giants Allianz and Generali have finished their long-term drive to consolidate reinsurance buying at the group level, a move that is pushing down their reinsurance spend.

Wolfgang Wopperer, global head of retrocession at Allianz Re says that Allianz had begun its drive to consolidate reinsurance buying at the group level back in 2004 and has now essentially completed the transition.

He tells Bermuda:Re that Allianz is now able to benefit from the “purchasing power associated with bundling our exposures and ceding them through only the one source”.

Wopperer says that in the past Allianz’s reinsurance buying was too decentralised and did not provide the insurer with sufficient oversight regarding its aggregate exposures. Allianz has been able to change this thanks to a bundled approach that delivers a full overview of its reinsurance programmes, he says.

Franco Urlini, head of group reinsurance and R&D at Generali, says that the insurer has taken a similar approach, consolidating reinsurance buying at the group level.

“At Generali, we now designate our retention as a group according to our risk appetite, class by class. We have quickly moved from a country-specific perspective to a group perspective. This has led to a huge decrease in our reinsurance expenditure, with a larger amount of premium now retained within the group.”

Urlini says that thanks to the positive technical profitability of its P&C business in recent years, Generali has sought “to retain most of our technical underwriting margins”, focusing on reinsurance to protect the capital position of the group within the framework of a wider capital management approach.

Urlini says that insurers have been able to further drive value in their reinsurance purchasing thanks to a pricing environment at the January renewals that saw rate declines on Generali’s book in the range of 10-15 percent.