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MONDAY 24.10.11 Don’t bank on an upturn Welcome to

Diverse perspectives on whether a cyclical upturn is imminent were given at Guy Carpenter’s symposium yesterday.

panies valued at well below book value. Finally, he said that

Chris Klein, Guy Carpenter; Clement Booth, Allianz; Chris Hitchings, KBW; Costas Miranthis, PartnerRe, Frank Majors, Nephila Capital


he fact that the reinsurance industry is asking whether a cyclical upturn is imminent,

means that it is probably not. That was the view of Chris Hitchings, insurance analyst at KBW, in a presentation he gave at Guy Carpenter’s symposium yesterday in Baden-Baden. Hitchings, who has seen four market cycles in

40 years following the industry, listed the key fac- tors he seeks when predicting such an upturn. He argued that, for the global reinsurance industry, almost none are in place right now. For a cyclical upturn to occur, a cyclical down-

turn and subsequent trough must occur first, he said. Showing historical reinsurance rates dat- ing back to 2004, he argued that rate decreases in reinsurance have not been as prominent as is broadly perceived. He also argued that historical reserves are

holding their own and reinsurers have not been writing business recklessly in search of growth rather than profits. In a cyclical downturn, he argued, investors reward reinsurers for top-line growth – something that has not been the case in recent years. In fact, the opposite is true. Investors are disenchanted with the reinsurance

somewhat sector with most general property-casualty com- are

an upturn is also char- acterised by tangible rate increases – as op- posed to industry ex- ecutives talking about them. “A true cyclical upturn is unmistak- able,” he said. “If you even asking the

question of whether it

is here, the answer must be ‘no’.” The session saw four speakers with different

perspectives to comment on the issue. The other speakers were: Costas Miranthis, chief executive of PartnerRe, Frank Majors, founder of venture capital fund Nephila Capital and Clement Booth, member of the board of management, Allianz. Introducing the session, Nick Frankland, CEO EMEA Guy Carpenter, said: “We find the diverse number of perspectives on this question intrigu- ing.” Chris Klein, head of sales operations (UK/ EMEA) at Guy Carpenter, said: “So many factors are at work to suggest that prices should rise, stay the same or even decrease. Trying to provide a forecast is especially challenging and, for once, I don’t intend to try.” For the perspective on this question delivered

by the other panellists, see the Intelligent Insurer newsletter tomorrow.

What’s inside

3 Economic factors and new regulation top the agenda

4 Growth opportunities possible despite difficulties 6 Run-off provides opportunities to optimise portfolio 8 VIG Re predicts a stable European renewals 10 Opportunities abound in the Russian market 11 Efficient transactions will help to add value for re/insurers



BADEN Research, analysis + opinion on international insurance + reinsurance

Baden-Baden W

olfgang Gerstner, the Lord Mayor Baden-Baden,

has issued a special welcome

to delegates

of this year’s Baden- Baden Reinsurance meeting and described

the relationship between the German town and the reinsurance industry as a historic one that represents an important part of the city’s heritage. “This meeting has developed a historical connection with our city and is one of our old- est established conferences,” he says. “Due to its successful history spanning several decades, it has become a firm pillar in our city’s history.” Since its origins as the Annual German Marine Conference, the Baden-Baden Rein- surance meeting has developed into a truly in- ternational event. Every year, thousands of re/ insurance executives descend on the town to discuss the upcoming renewals. Part of the meeting’s success is down to the

suitability of the city to hold such an event, argues Gerstner. “Every hotel, restaurant and all confer- ence facilities are within walking distance which means we are better positioned than most cities to fulfil the requirements of this meeting,” he says. “We are also building and planning new ho-

tels. In the Kurhaus, the Benazet Hall has just been totally refurbished at a cost of €8 million. And the ‘Kongresshaus’ – our Convention Centre in the heart of the city in the park – offers numer- ous seminar and conference rooms and is due to get an extension in the spring of 2012.”

12 Collateral trusts offer a valuable alternative to letters of credit

13 A market reaction will be necessary to improve pricing

14 Securitisation’s standing is on the up, says Hannover Re

15 Data innovation will be key to industry’s future development

17 Underwriting needs to get back to basics, says Novae Re

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