14
September 2012 Bermuda Re/insurance
is where reinsurers, risk-modelling firms and brokers can offer a lot of support for their clients. Knowledge networks can make an important contribution in this context. Mutual cooperation will further improve risk management on both sides of the re/insurance industry’s balance sheet.
What strategies do you expect reinsurers to employ in 2012–2014 to maximise their relative position and returns?
Cash: I am mostly observing two trends—geographic expansion and increased focus on specialty lines of business. Younger, smaller reinsurers with presences in Bermuda and London, will increasingly be looking to build out teams in the European, Asian and perhaps Latin American markets. In effect these companies are saying ‘there are many client companies that are big enough to be relevant to us, but small enough that they don’t want to have to travel to London or Bermuda’ and the way they do business with these clients is to have a physical presence in or close to these markets. This trend helped to spur the build out of the industry in Zurich and may do the same for other locales in the future.
The other trend is that there is an increasing demand for capacity lines of reinsurance where specialty underwriting skills are required. This is particularly true in emerging markets such as Latin America. It is also true of the specialty lines of business such as trade credit and surety, engineering and agricultural reinsurance. In each case, clients need both capacity and at times advice and support in covering new or more complex risks.
Driscoll: I can only really talk to Validus’ strategy. Our number one priority is to focus on growth in book value. Diversification is something that we strive for, but only in areas and products where we feel we can understand the risk and receive an appropriate margin for the business. We emerged from 2011 in pretty good stead, following what was a difficult year, and despite more than $100 billion of global cat losses, we still produced an underwriting profit. We were unrelenting in our focus on understanding risk, particularly in non-peak territories, and were careful about appropriately managing and pricing that risk. We were the only short-tail company in our peer group to have made money in 2011, while a lot of what others would consider diversified companies made a loss. Diversification for its own sake has certainly lost a lot of flavour.
That said, we have not changed our mentality on diversification—
we will maintain a focus on our current profile. We believe that where we are currently positioned is the best-priced segment of the global market, but if other areas change and more margin comes into those territories or products, we will certainly look to broaden our product offering. But in the end it is all about growing book value. If there are sufficient market opportunities we would always look to put our capital to work, but if there are not opportunities, then I think ourselves and the wider market will manage capital aggressively
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76