News he role that securitisation plays in reinsurance is becoming increasingly


important to the industry and, as such, is starting to feature as a talking point more often at meetings such as Baden-Baden where reinsurers and cedants get into the nitty gritty of negotiations ahead of the January 1 renewals. That is the prediction of Hannover Re chief


24.10.11 MONDAY


Securitisation is growing in importance T


executive Ulrich Wallin who explains that par- ticipants have far more in-depth discussions here in Germany compared with the Monte Carlo Rendez-vous in September. “As far as reinsurance structures are con-


cerned, Baden-Baden is a little more concrete in comparison to the high level discussions at Monte Carlo, and insurers and reinsurers get to speak more about concrete programmes and structures,” he says. “I don’t think that contracts are agreed


upon at Baden-Baden, but it provides an often important first round of discussions on the re- insurance structures, programmes and expecta- tions in the run-up to the renewals season.” In terms of securitisation, Wallin explains


that this is becoming an increasingly important risk management tool for the company across


Ulrich Wallin, chief executive, Hannover Re


its portfolio. “On the one hand we use securitisations as a


tool of risk management on our cat exposures; they are an important part of our overall ret- rocessional programme and will continue to be in the coming year,” says Wallin. “We will continue to buy from that market and we are already discussing the renewals for 2012.” Hannover Re has a separate department dedicated to insurance-linked securities (ILS),


where the company is engaged in investing in ILS through a dedicated fund. “In addition to this we are involved in trans-


ferring reinsurance business into the capital markets with a view to bridging the necessities of the markets and of the cedants and the rein- surance field, and of course with a view to gen- erating income for Hannover Re,” says Wallin. “We see some good growth opportunities in this area for the coming year.”


Reinsurance remains a valued product D


espite what has been an extremely challenging


year for reinsurers with


extremely high cat losses and low investment returns making turning a profit a challenging task, the reinsurance market still offers good value to both clients and investors. That is the view of Gary Masters, chief ex-


ecutive of broker Alwen Hough Johnson. He says that, despite these substantial hurdles, re- insurers are still able to offer a valuable product to their clients, and it is the job of brokers to


communicate this to clients. “Opportunities come from ensuring that pro-


spective clients, as well as existing clients, recog- nise that the reinsurance market is able to provide them with the product they are seeking,” he says. “Although there have been difficulties in 2011, the reinsurance market is still able to provide a valued product. It is our role to get that message across.” But Masters notes that insurers also face se-


rious challenges – something reinsurers must be mindful of in negotiations.


“Our clients have the pressures of the current


economic situation to confront, such as reducing incomes, so we need to be able to ensure that rein- surers, when providing their products, are taking these issues into account as well,” he says. “That means the margins have got to be ap-


propriate as far as the cedants are concerned, albeit given the pressure on reinsurers to make a healthy return on capital, particularly in view of the losses they have suffered during the course of 2011.”


14 | INTELLIGENT INSURER —BADEN-BADEN TODAY | Monday October 24 2011


www.intelligentinsurer.com


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