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Navigating the Course:

The CFO Perspective With confluence of current market dynamics, the level of transactional activity, the required focus on capital management, the pace of regulatory change, and the increasing focus on technology and data, the need for strong financial and strategic stewardship is at an all-time high. Our panel weighed in.

Joe Henry, Chief Financial Officer, Axis Capital Holdings, said: “One of the biggest challenges that I have is how to look at deployment of capital. At Axis, we really look at three or four things. The first is, can we put it to work in the business? Secondly, can we make some strategic investments? The third would be M&A. And then last it’s returning capital to our shareholders in the form of dividends and share buybacks.”

Mike McGuire, Chief Financial Officer, Endurance Specialty Holdings, said: “Frankly, we are getting close to the point in the cat space where the return profile just does not support significant retentions. We are maintaining our front footprint, but we are ceding a fair bit of that business away to protect the net position.

“I think the next time we see a series of big events I think you will see some differentiation among companies out there in terms of their performance -

those that are viewing the soft market as a time to increase retentions or those that are viewing it as a time to rationalise and control the risk and reduce their net retentions. It will be very interesting to see post event what happens.”

He added, “First and foremost for us, deploying capital to build our business organically is a key focus for us.”

Jason Porter, Director, Standard & Poor’s Ratings Services, noted: “With excess capital we have seen certain companies, not all companies, but a handful start to look a little more closely at their excess capital and say ‘how much do we really need?’

“I think that it’s a potential that maybe the truer absolute levels of excess capital might be slightly less in the future but I think it’s a sustainable position that the industry remains well capitalised.”

Bermuda Reinsurance Conference 2014 9

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