one thing we’re trying to do, expand geographically and then also by line of business. I probably wouldn’t agree that there’s much margin left in even those other lines, as much as you try and be innovative.


As Jed said, everything is pretty thin right now, but we’re still trying to expand across geographies and develop more diversification. Talking about regulatory issues, we’ve gone from dealing with just the Bermuda Monetary Authority (BMA) to now dealing also with the Swiss regulator FINMA and state regulators in the US, so there are a lot of challenges.


Rhoads: Having been both merged and acquired at different times in the last four years, I take great comfort being a part of an organisation that has both insurance and reinsurance operations, a Lloyd’s syndicate and international operations, and is a diversified entity. We’re touching a lot of our clients and retail producers and managing general agents and wholesalers in ways that we never did before.


I didn’t fully appreciate this at Alterra, but what I’m realising now is that the food chain in our industry always starts with insurance—there is no reinsurance without insurance. The insurance industry feeds the reinsurance industry, which tends to then re-feed it back into the reinsurance industry or the capital market, which then recycles the risk back to the insurance industry.


I worry a little bit about those parts of the food chain that are not directly involved in the insurance industry and simply take risk from reinsurers and ship it into the capital markets, when there’s nothing coming back— it’s a one way street out of the industry.


Few: This is a difficult cycle—particularly in property cat—but actually across the board reinsurance is challenging, while on the investment side we’re in a period of prolonged low investment returns. We can’t rely on the bounce-back that typified cycles in the past because of the way in which capital is supplied to the industry now. There are, however, several things we have to be thinking about in order to try and achieve a reasonable margin for our shareholders.


One is diversification, certainly insurance and reinsurance, multi- product, multi-region—the more you can spread your sources of income


the better at the moment. If you’re relying just on property cat, then it’s intensely competitive.


Then you’ve got to look at your supply of capital. We’ve got to access multiple types of capital as they don’t all have the same characteristics or cost requirements and we’re having to look harder at how we source that capital, in order to remain as competitive as possible.


Then on the investment side our industry has been pretty conservative, but I believe that we need to take a look at just how conservative we’re being with our investment strategies. Can we afford to be as conservative? That’s a tricky one, because of rating implications as much as anything else, and every time you want to take a little more investment risk you’ve got to apply more capital to it so there’s not necessarily a return on equity driver, but that’s another area that we’re all being forced to reconsider.


So if you look at all those different levers you can pull, maybe in this cycle more than any previous cycle we have to consider them all, and it’s not obvious that the cycle will respond in the same way in the future as it has in the past.


Gutzwiller: Five years ago it seemed there was a flight away from alternatives on the investment side, but the mandate has come back to expand alternative options and try to chase a little yield if possible. The other concern relates to capital deployment, with a focus on share buybacks and M&A.


Is the market tending to pursue diversification or concentration of expertise, for example, in property cat?


Jordan: That’s actually the two focuses that we have. Bermuda’s focus has always been on cat business, but it’s a big consumer of capital so we have to manage that and try and build out the other side of going into other lines that are diverse and don’t consume so much capital.


It’s a challenge to grow both at the same time, but Bermuda’s more the line specialist whereas Zurich and the US are more client-centric. It’s a different mindset because when you’re line-specific you’re looking more at transactions and trying to write business that’s profitable.


15 Bermuda Finance | 2014


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