Hiscox Re to increase capacity on back of balanced book
(Continued from bottom of page 1)
Dolphin said that while many of Hiscox’s
clients at Baden-Baden have not been directly
impacted by the losses caused by hurricanes
Harvey, Irma, Maria and Nate, they will be
curious about their implications on the global
reinsurance marketplace and, ultimately, what
it means for them.
“There remains uncertainty around
how much capital has been destroyed and
locked up by the events, for both traditional
and ILS capacity,” he said, and this would
make the upcoming European renewals an
“European rates have softened to their
lowest level since windstorm Lothar in 1999, to
“The January 1 renewals will
be an interesting bellwether
for the year ahead.”
levels that are, in many instances, paying below
the modelled expected loss,” he said.
“The January 1 renewals will be an
interesting bellwether for the year ahead, but
they won’t tell the whole story as losses develop
and capital positions become clearer the longer
“We still expect to see rate hardening at
January 1 with a first step made towards more
sustainable pricing levels,” he concluded. n
BADEN TODAY Tuesday October 24, 2017
Disruption the theme of
The Guy Carpenter Baden-Baden 2017
Hannover Re prepares to
grow its book as nat cat
losses drive rates upwards
INTELLIGENT INSURER’S BADEN-BADEN TODAY
IS PUBLISHED BY NEWTON MEDIA LIMITED.
Registered Address: Kingfisher House,
Lines of business hit by the natural
21-2017 23 catastrophe could ultimately Elmfield losses in the third quarter of
offer an opportunity
Road, BR1 1LT, United Kingdom
for Hannover Re to grow its book of business,
Email:Michael Pickel, executive board member–
property & casualty info@target markets,newtonmedia. Hannover
Re, told Baden-Baden Today.
www.He said the reinsurer newtonmedia.that in the run up to the renewals,
will first be assessing how primary
rates respond to the losses. Where rates in this
segment of the business harden, Hannover Re
YOUR will look to ensure it also benefits.
“We will look at CONTACTS all affected loss areas and
see whether the primary business will react;
where the primary rates show some hardening
Christian we will take advantage of it,” Pickel said.
Total insured losses Wuestner from the natural
catastrophes including hurricanes Harvey,
Email:Irma and Maria cwuestner@could exceed $100 billion,according to estimates from the catastrophe
modelling companies. And that is before the full
missing its targeted €1 billion ($1.18 billion)
extent of other losses, including the California
group net income in 2017.
wildfires, are taken into account.
But Pickel described the losses as potentially
John Hannover Walsh Re issued a profit PUBLISHER
warning on the
having a positive effect on the industry. He said
back of the US catastrophes. It expects losses
the absence of large losses had driven rates to
will exceed its large loss budget because of
a point where they did not reflect the reality of
Telephone:them and this is likely to result +in the 44 company
7803 catastrophe 047 events (Continued 986
top of page 2)
Email:Hiscox john.Re walsh@to increase newtonmedia.capacity on co.back uk
of balanced book
Hiscox Re’s strategy of balancing its
“Investors understand that the
internationally traded, catastrophe
cyclical nature of the industry
exposed big ticket insurance and reinsurance
lines with low volatility retail business is built
means that to maximise their
exactly for times like this—when rates are likely
returns, they have to be in the
Nicholas to harden, according to Lipinski
Andrew Dolphin, chair
market long term.”
of international business at Hiscox Re.
He said the strategy, which Hiscox Re has
under less pressure to maintain its top line
maintained for more than 20 years, puts the
when market conditions deteriorate.
PRODUCTION company in the unique position of being able
to grow its reinsurance and big ticket insurance
AND “Depending on pricing, we are prepared
to grow our European DESIGN
book in line with opportunities—yet it is also
portfolio; however, much of the European
www.intelligentinsurer.com | www.bermudareinsurancemagazine.com DAY 2: Tuesday October 24 2017 | BADEN-BADEN TODAY | 1
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Intelligent Insurer – ISSN 2041-9929
Hannover Re prepares to grow its book as nat cat
losses drive rates upwards
Hannover Re’s case will be helped in the US
by the dynamics in the primary market where,
Pickel believes, there was momentum towards
rate hikes even before the hurricanes struck.
The primary market in the US is prepared
to increase rates, he said. Before the hurricanes,
primary property lines of business in the US
showed too many attritional losses and the price
increase was already visible. “The hurricane
losses have just accelerated this trend,” Pickel
At the very least, he believes, the heavy losses
in the US will prevent any further rate decreases.
The price changes in the affected regions will
also have repercussions for other markets.
“Rate decreases even on claims-free
programmes are no longer possible,” Pickel
“Our philosophy in the January renewals
is not to accept any further rate decreases.
Where this happens, we will certainly cut back
and reduce our presence in those markets,” he
It is now a case of the reinsurer carefully
selecting the lines on which it is willing to
increase capacity and seek growth. In the
upcoming renewals, Hannover Re is most
interested in the US property business, property
per risk business or pro-rata business, and to a
certain extent, cat business, Pickel said.
“We will watch to see whether there is a
firming in rates in the casualty business and
then potentially increase our exposure,” he
(Continued from top of page 1) such as those
seen in the third quarter, he noted. “We are
getting back to normality.”
He noted that the extent of the losses will
have come as a surprise to many in the industry.
The claims will be higher than many reinsurers
will have budgeted for; higher than people
would have expected based on modelled losses,
As a result, Hannover Re is expecting
significant rate increases in P&C business.
While this will be concentrated in the regions
affected by the hurricanes in North America,
the reinsurer also anticipates increases in
other non-loss affected lines in the upcoming
Overall, the German reinsurer’s aim
is to bring P&C rate levels back to 2015
levels, Hannover Re CEO Ulrich Wallin
said during an October 19 investors’ day in
Frankfurt. In some cases, this could mean
very steep rate hikes.
“On some businesses, this would mean
significant increases. Florida cat will probably
need increases of 40 percent to 50 percent,”
Pickel told Baden-Baden Today that the
reinsurer will seek rate hikes on lines where
severe losses have occurred.
“We always try to recover in the areas where
losses have occurred. Last year it was the Fort
McMurray wildfire in Canada where we have
increased rates and this will happen to the cat
and property business in the US,” he said.
Reinsurance Symposium has placed
disruption at the centre of the agenda and identified
it as the theme for the annual industry meeting
during the opening event, which featured Munich
Re CEO Joachim Wenning as one of its speakers.
Disruption, according to most definitions, is
synonymous with disturbance or a problem that
interrupts an event, activity or process, James Nash,
president international at Guy Carpenter explained.
The industry is facing disruption from many
directions, but the term is not new to the industry:
the Bermuda market challenged the status quo,
especially for catastrophe writers within Lloyd’s,
“The catastrophe model companies changed
the way we look at risk and introduced advanced
mathematics to the underwriting process. More
recently, the entry of new capital into the sector
has stirred up the market,” he added.
The sector is waiting to see the extent to which
the financial markets, which are more active than
ever in the industry, will be able to deploy capital
quickly after the recent nat cat events, he said.
Players hoping that those participants will react
with rationing of capacity, followed by significantly
higher prices, will no longer be ensured survival,
Nash warned. For them to survive, they need to
find new and better ways of doing business.
While disruption is not a new development,
the pace and the diversity of that disruption today
are new, Nash noted. (Continued on page 15)
business we see requires a significant rate
increase to look attractive,” he added.
This follows an announcement made on
October 11 by Hiscox that it plans to increase
its 2018 capacity for Syndicate 33 at Lloyd’s
by £450 million ($594 million) to £1.6 billion
($2.1 billion), subject to Lloyd’s approval.
The increase in capacity is driven by an
expected improvement in market conditions and
a desire to have sufficient capacity available to
participate in a widespread market turn, according
to a statement. (Continued bottom of page 2)
2 | BADEN-BADEN TODAY | DAY 2: Tuesday October 24 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com