Q3 losses could be biggest cat event
www.intelligentinsurer.com | www.bermudareinsurancemagazine.com
“AzRe Reinsurance” OJSC is the first
and the only reinsurer on Azerbaijan
The company was founded in 2007,
total equity of the company as of
January 01, 2017 is AZN 75,4 mln and
total assets exceeds AZN 103,6 mln.
AzRe Reinsurance is not only a leading
reinsurer of the local market, but also
operates very succesfully in foreign
markets. Main business lines that we
write are the followings: property,
engineering, liability, motor, personal
accident. “AzRe Reinsurance”
cooperates with the leading foreign
insurance companies in Europe and
CIS, Gulf Countries and Middle East,
North Africa and other regions.
AzRe successfully created two
additional pillars to the reinsurance
strategy in the form of Qala Life and
In October 17, 2014 A.M. Best has
assigned a financial strength rating of
B+ (Good) and an issuer
credit rating of «bbb-» to AzRe
Reinsurance. The outlook assigned to
both ratings is stable.
In September 2016 «AzRe
Reinsurance» OJSC increased the
share capital by 25%, namely from 40
million to 50 million manat.
Net profit of “AzRe Reinsurance” OJSC
for 2016 year was 15 mln 505
thousand manat. Total
income for 2016 year was 67,4 mln
manat and total expences was 47,2
mln manat. Income tax was
paid in the amount of 4,68 mln from
the profit amount of 20 mln manat.
income: 53,7 mln manat.
(Continued from top of page 1) “If you are
a regional buyer and you have had good loss
experience for the last few years, you will feel you
should be rewarded for that. If you are a seller,
you need higher returns on capital in order to
offset those losses,” he said.
“The job of a broker is to make both of those
arguments and to persuade buyers and sellers to
come together to secure the right cover at the
best prices—that’s what is making this year so
interesting. The renewal will be later this year,
more interesting and much busier.”
Another related theme at Baden-Baden has
been a focus on alternative capital, including
the insurance-linked securities (ILS) market;
‘trapped’ capital; and whether alternative capital will come back into the
Flandro added that many delegates are wondering whether the risk
modelling agencies will make adjustments to the cat models.
On October 23, JLT Re released its Winds of Change report, which
addresses many of these questions, from pricing to capital and reserves.
The report examines the triple blow hurricanes Harvey, Irma and
Maria dealt the US and the Caribbean and assesses how these events
are likely to impact the reinsurance market. It also highlights the key
differences between this year and previous market-changing losses.
It notes that reinsurers face the elevated losses of 2017 from a position
of capital strength.
According to JLT Re estimates, the market entered this year’s hurricane
season with upwards of $60 billion of excess capital. According to the
report, any net reduction to sector capital is expected to be manageable due
to continued capital generation by major traditional players and, perhaps
more important, sustained capital inflows from alternative sources.
“The report gives a good overview of the market as it stands but does
not give any rate predictions,” said Flandro.
“We are homing in on an idea of what is going to happen at January
1 but it’s still early. Everybody here now has a fair idea of what they
are aiming for, whereas at Monte Carlo we were in the midst of the
hurricanes and nobody knew what, precisely, it was going to mean.”
Regarding the reaction of alternative capital to these losses, Flandro’s
view is that it is rallying and coming back into the market, without much
evidence of the dimmed appetite that some have been predicting.
“Providers and facilitators of alternative capital are talking about
second event funds and we’ve already had two cat bond issuances post
the hurricanes. There used to be a theory that if the cat bond market
were ever tested it would lock up, but that’s not happening. Third party
capital is in the process of reloading,” he said.
He noted that there is some trapped collateral, as there are certain
collateralised covers for which, when a portion of the deductible is
exhausted, the whole limit has to be held, so it is now a question of when
that limit can be released.
“That is a bit of a question mark but it is one of many factors driving
the retro market and the reinsurance market. Alternative and traditional
capacity are reacting to what has been happening which should mitigate
very large swings at January 1,” he added.
A key development in the ILS space is the
potential for London to become an ILS hub—a
move which, Flandro said, could potentially
create competition for Bermuda and New York.
“London buys a lot of ILS but doesn’t issue
much. We are excited about the possibility of its
becoming an ILS hub. If it comes to pass—and
I think it will—we will do everything we can to
foster a strong ILS market in London,” he said.
Regarding JLT Re’s approach to the current
market and its aims at Baden-Baden, Flandro sees
this as an important opportunity for the company
to differentiate itself by obtaining the very best
cover for its clients.
“We see it as hugely important for us to do a good job here—it’s an
important time for the sector to do what it does best and provide excellent
service and cover for the people who need it.
“On top of that we have some exciting cat modelling tools and some
interesting economic capital modelling solutions we are coming out with.
As head of analytics this is an important focus for me to help people get
the best solution,” he concluded. n