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Product Innovation & Distribution

Investors currently benefit from a variety of options or vehicles in which to deploy capital seeking reinsurance correlated returns. But has the innovation in serving the needs of the buyer kept pace with the innovation in serving the needs of the investors?

Kean Driscoll, CEO, Validus Reinsurance, said: “I would argue broadly speaking that where we have seen innovation hasn’t necessarily been on the product side. There has certainly been tremendous innovation with respect to vehicles to facilitate capital inflows into our market space or to capture the risk profile of particularly ‘nat cat’, but the traditional market I think over the last century to century and a half has developed a product suite that is incredibly flexible. It may have been largely homogenised in terms of how it is sold. But true product innovation we haven’t really witnessed.”

“I think we are differentiating ourselves,” said Kathleen Reardon, Chief Executive Officer, Hamilton Re. “As far as innovation – the sidecars and the cat bonds and the ILS industry is innovation that benefits the clients. Ultimately the cost savings gets passed on to the clients. But now I think we need to innovate again. I think we are on the cusp of change. What is the next innovation?”

She added: “To remain relevant I think you need to accept the convergence of the capital markets.

“You see a lot of reinsurers now looking on the insurance side ... and then you see the opposite. There are many insurance companies that are looking into the reinsurance space. So becoming relevant doesn’t mean you need to be relevant in your sector. You can think beyond that and accept the convergence of various sectors.”

Charles Cooper, President and Chief Underwriting Officer, XL Re, said: “There’s been a lot of innovation in providing vehicles that allow investors to access cat risk primarily. I think what’s happening though is the knock on effect of that is creating additional evolution by traditional reinsurers and alternative capital providers.

“I think everyone at this stage in the market is looking for a way to differentiate themselves and product innovation is a clear way to do that. I don’t think it’s been

especially fast and in large part it’s been a reaction to all this additional capacity coming into the market and trying to figure out a way to get utilised.”

Tom Hulst, CEO, Ariel Re, said: “I think the business is fundamentally - whatever your platform - about risk selection. I think over time the best risk assessors are going to be rewarded.”

He continued: “From my perspective I think about it as can we as a business offer products that are relevant and useful and an effective value proposition to our customers.

“I don’t really think as much about the model that we are offering that in. I think of us as risk assessors on behalf of our owners and in order to get the broadest opportunity of risk to select from we need to be offering a competitive and differentiated suite of products to people and doing so in a way that encourages them to place the business with us and come back for the next opportunity.”

Bermuda Reinsurance Conference 2014 15

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