News he pressure to write more premium income to cover losses from the first half


of the year but without reducing rates means reinsurers are increasingly open to writing new business in niche areas and from previously under-developed markets. That is the view of Andrew Hinds, direc-


tor of reinsurance in the international division of broker Besso Limited. Hinds is charged with growing the international reinsurance portfolio of the broker, which represents just 20 percent of its global business at present, and says reinsur- ers are particularly keen to explore some of the more specialist business Besso can offer. “Reinsurers are trying to find ways to se-


Turkey and the Ukraine and is in the process of forming operations in several other global loca- tions. Hinds says the broker is particularly keen to work with insurers in developing markets to help them develop new products. Underpinning this process, he says, is often a robust and well constructed reinsurance programme. “Some of these markets are developing fast


25.10.11 TUESDAY


Reinsurers are seeking niche risks T


and have great potential. They are moving to- wards a Europe-wide model for insurance but there will be teething problems along the way and some insurers lack the confidence and ex- pertise when it comes to new product lines,” he says. “We will work with these players to achieve that and, critically, to source the right


“Reinsurers are trying to find ways to secure new premium income and that suits our strategy.”


cure new premium income and that suits our strategy,” Hinds says. “We like to develop new opportunities rather than just shift business around and reinsurers appreciate that. They need to be writing premium income but they cannot secure more business simply by cutting rates. That makes them more flexible and open to opportunities in more niche and sometimes challenging business areas.” The headquarters of Besso’s international division are in London but it also boasts offices in


reinsurance solution. With that in place, it gives the client confidence in their product. It is often the cornerstone of its creation.” Where this happens, Hinds says Besso pro-


vides a useful service to both parties: enabling insurers to explore new product lines while also offering reinsurers the opportunity to secure premium income from a new source. Hinds adds that Besso is focused on growing


the reinsurance side of its business. Along with its planned geographical expansion through


Andrew Hinds, Besso Limited


opening new offices, the business is also lever- aging the contacts and expertise it has on the direct side of the business. The broker was once focused almost exclu-


sively on the US wholesale market on the direct side. Its growth strategy and acquisitions in re- cent years have meant its international division is now the biggest and fastest growing part of the business employing around 50 of the company’s 200 staff. It also recently completed a deal to re- acquire a percentage of its own shares from a US bank, which had helped fund a management buy-out in the 1980s. “It means we are now a completely independent self-governed broker,” Hinds says.


Expect a flat renewals as conditions for hardening yet to align R


einsurers’ financial strength and healthy levels of capacity combined with difficult


macroeconomic conditions will likely result in a relatively


flat renewals, says Andrew


Butt, partner and member of the executive committee at broker Lockton. He questions how committed reinsurers


are to imposing rate increases with evidence from the market suggesting that conditions are yet to coalesce for a turn. “Simply skimming the weekend’s press it is evident that there is little to propel a hard market,” Butt says. “Ev- eryone is talking about risk – and risks in the wider market are real – but we are yet to have sufficient destruction of capital to drive a hard market. “There are good levels of stability in the bal-


Andrew Butt, Lockton


ance sheets of reinsurers, suggesting that rates will likely remain as they are. Admittedly there


16 | INTELLIGENT INSURER —BADEN-BADEN TODAY | Tuesday October 25 2011


are still some cash payments to come from cat losses earlier in the year, which will likely serve to place some strain on balance sheets, but real holes are yet to appear.” Reinsurers will have a hard time convincing


insurers to pay more on those lines unaffected by losses, Butt says. “Insurers clients are facing hard times and with their margins under pres- sure that will likely track through into the rein- surance market as well.” Butt says that while macroeconomic factors


have the potential to prompt rate increases, conditions are not there yet. “The industry is solvent and certainly in far better shape than the wider financial industry. This strength would suggest that the current rate environ- ment is appropriately priced. There really is no need for a draconian knee-jerk reaction over pricing,” he says.


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