12
September 2012 Bermuda Re/insurance
rawing insights from David Cash, president and CEO of Endurance Specialty Holdings, Kean Driscoll, CEO of Validus Re, Charles Dupplin, CEO of Hiscox, Bermuda, James Few, president of Aspen Re and Torsten Jeworrek, CEO of reinsurance at Munich Re, we addressed three key questions facing re/insurers attending this year’s Rendez-vous.
D
Which conversations do you expect will be the most difficult and most pressing in Monte Carlo?
Cash: I expect the conversation at Monte Carlo this year will focus on a combination of underlying rates and the need to improve the margins on reinsurance treaties. Over the last five years, we have seen a steady erosion in the profitability of the core property and casualty treaties either as a result of underlying rates not keeping up with loss trends or due to an increasing awareness of the potential for catastrophe losses.
Certainly it is clear to me that reinsurers are comfortably solvent and, by that standard, rate increases may not be as critical as they have been in past years. That being said, the issue of low margins in the treaty marketplace is one that has caught the attention of reinsurers both in Europe and overseas and it is my expectation that we will see a steady push to correct this over the next few renewal cycles.
Driscoll: I think the most pressing conversations will be around supply:demand dynamics in the marketplace. Balance sheets have strengthened—not only in the reinsurance market and in comparison to 12 months ago, but also in the global insurance market—so the question will be how much demand there will be relative to capacity. Monte Carlo is the first opportunity for people to get a feel for the supply:demand dynamic and how that will influence rates. People will be trying to calibrate where their marketplace will be.
Also, given that Monte Carlo is focused on European and other non-US business, some of the difficulties around sovereign debt will undoubtedly be discussed. It remains to be seen whether the situation will translate into opportunities for the reinsurance market. Reinsurance is a fantastic product for providing capital protection and relief if companies have issues elsewhere on their balance sheets, and it will be interesting to see whether asset markdowns translate into companies exploring more reinsurance solutions to protect the balance sheet from catastrophe and similar losses
Dupplin: I think solvency and regulatory changes around the
world are really big issues—there have been no great catastrophes thus far so they’re the issues that could alter the landscape of the industry. We’re in a fascinating phase, and Bermuda is doing very well and will finish putting its regime in place on time and in a very impressive way, but the story is different in Europe where there is
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