News


conomic factors and challenging market conditions will drive the subject of cost to the forefront of discussions at


this year’s


Baden-Baden as some buyers look to reduce their reinsurance expenditure, says Matthias Meyenhofer, head of ACE Tempest Re Continental Europe. “I expect the discussions to focus very much


on price,” he says. “Price is an important point but I believe the discussions must be broader and cover the full topic: what is the risk transfer required, what quality and security is wanted and ultimately what should be the price for that?


“Given the economic situation we are in,


there is cost pressure along the whole value chain. Consequently, I would not be surprised to see buyers aiming at reducing their reinsur- ance purchase for ‘budgetary reasons.’” However, Meyenhofer believes buyers that


do this would be making a mistake. He points out that depressed underwriting income and


depressed investment returns mean reduced margins for insurance companies. “Margin is as important for the risk carry- ing capacity as is capital,” he says. “So, with re- duced margins they have reduced ability to ab- sorb risk. That means one of three things: they increase risk transfer or they reduce their busi- ness or they become riskier as an organisation. “I would argue that increased risk transfer


is the best alternative as long as reinsurance capacity is available at interesting prices. How- ever, while capacity is an important element for clients, security is an even greater consideration for all lines of coverage.” It is in these areas that Meyenhofer believes


that his company can offer value to clients. “We have a strong balance sheet, significant risk bearing capacity and we are willing to sup- port our partners’ business provided the price is adequate for the risk,” he says. “We are not dogmatic regarding type and form of risk trans- fer but the business needs to make sense for


Matthias Meyenhofer, head of ACE Tempest Re Continental Europe.


both sides. Ceding companies need choice and counterparty risk diversification. That is where ACE Tempest Re comes in.”


24.10.11 MONDAY


Reducing coverage would be a mistake E


Long and short tail. Not tall tale.


Contacts: VIG RE zajišťovna, a.s., Praha City Center, Klimentská 46, 110 02 Praha 1, Czech Republic www.vig-re.com, T: +420 221 715 505, F: +420 221 715 511, M: info@vig-re.com


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