HIM losses will be capital
event for some syndicates
but Lloyd’s steady on cat
Russia’s national reinsurer makes its mark in year one
(Continued from bottomw of page 1) Rautmann
suggested. “The P&C market remains
attractive, but it’s not growing fast,” she noted.
Despite a rebound of the economy to more
than 2 percent GDP growth in 2017, according to
estimates, this economic growth has yet to reflect
on insurance and reinsurance demand, Rautmann
suggested. This is perhaps not surprising as
investment in engineering projects, for example,
takes time to transfer to the reinsurance business.
Instead, life & health is developing to a
growth driver for Swiss Re in Russia. “We
are seeing an uptick in life & health insurance
and reinsurance in Russia,” Rautmann said.
Demand for health insurance is on the rise,
including for specific products, for example
covering cancer risk.
In CEE, Swiss Re is observing an uptick
in motor third party liability losses on the
“greencard side,” which means they occur in
a different country from where the insurance
contract is based. “These losses can be quite
sizable from the cedants’ perspective,” she said.
The losses may be higher as in a foreign
country other compensation rules apply, and
compensation levels may be much higher, she
“We see an uptick there in both frequency and
severity,” Rautmann said. This can be caused by
an increase in cross-country transportation causing
higher claims from truck fleets, as well as locals
working abroad and travelling by car between their
home country and workplace, she added.
This is something Swiss Re is keen to
address: “Prices currently don’t pay for the risk
factors,” she explained.
In addition the low interest rate environment
is causing some disconnect between prices and
costs in the motor business, Rautmann noted.
If the discounting rate is lowered, as happened
in the case of the Ogden rate in the UK,
reserving levels need to rise.
“We are talking to our clients about the
trends we are observing; we are discussing how
this influences the renewals,” she said.
“From our perspective, there is the need for
a higher remuneration for what we cover,” she
BADEN TODAY Powered by:
Cedants wary of conflicts
where reinsurers compete
on primary business
Wednesday October 25, 2017
INTELLIGENT INSURER’S BADEN-BADEN TODAY
4 BEALE VOWS TO RECLAIM
IS PUBLISHED BY NEWTON MEDIA ‘STOLEN’ ILS MARKET
6 SWISS RE EYES LIMITED.GROWTH IN
Registered CAddress: Kingfisher House,8 FAIL TO PREPARE—
edants are becoming increasingly sensitive
10 JLT RE AGAIN WARNS ON
21-to reinsurers competing with them on
primary 23 business,Elmfield and new fintech insurers Road,in
BR1 1LT, United 13 UNIPOLRE Kingdom
particular prefer partners with no such conflicts,
Email:Michael Pickel, member info@of the executive newtonmedia.board at
14 BETTER CAT DATA COULD
Hannover Re with responsibility for reinsurance
OPEN AUSTRALIA MARKET
TO ILS DEALS
in property & casualty target markets including
www.North America newtonmedia.and Continental Europe, told
15 BADEN-BADEN TODAY
16 HAMILTON AT LLOYD’S TO
Pickel argued that where reinsurers operate
DOUBLE 2016 PREMIUM
on the primary side of the business—a trend
17 RE/INSURERS MUST KEEP
YOUR that has become more prevalent in recent
years as they seek growth CONTACTS away from their own
PACE WITH CHANGES
18 TOKIO MARINE KILN PLOTS
stagnating sector—it can lead to conflicts of
EUROPE CYBER GROWTH
interest and inconsistencies in pricing.
20 CORRELATION OF FLOOD
Christian Pickel said the fact Wuestner that Hannover Re
EVENTS POSES RISKS
does not complete on the primary side is a
21 SWISS RE SURVEY
competitive advantage for the reinsurer.
22 SOGESSUR CREATES P&C
“This is a decisive between us and cwuestner@and distinctive difference
some of the other big reinsurers
22 INTERNET OF THINGS WILL
CREATE NEW RISKS FOR
we compete with,” he said. “Clients are becoming
more sensitive to it, which is resulting in more
23 VIG RE LOOKS TO MITIGATE
John pure-play reinsurance models emerging.”
Other reinsurers Walsh have highlighted PUBLISHER
in recent months including PartnerRe which, free
Telephone:from the pressure of quarterly earnings +44 and growth
business to QBE targets now that it is under private ownership, has
7803 specialist Enstar 047 in 2006 and Group in 986
the rest to run-off
Hannover Re does write facultative
reinsurance, covering single risks, which are
abandoned building a primary operation in favour
Pickel said the reinsurer learned lessons from
unique or complex. He said that in this sphere
Email:of operating as john.a pure-play reinsurer.
Hannover Re is cautious email@example.com experience including that, compared with
in particular reinsurers can run into problems if
of the primary side
running a reinsurance business, a very co.different
they have a primary unit competing with cedants.
for other reasons—it has endured some negative
set of skills and expertise is needed to run an
In some instances, the reinsurance arm of the
experiences. In 1998, seeking diversification, it
insurance company. “It is tricky and we now
same company may argue the price their client
acquired Clarendon National Insurance, a US
avoid it, which also means we do not compete
has quoted is inadequate, despite its being
speciality insurer. It sold the specialty insurance
with clients,” he said.
comparable with (Continued top of page 2)
Nicholas Buyers must Lipinski
follow rates down or lose competitive edge
Despite acknowledging that pricing in
advantage, Amer Ahmed, chief executive of
of protection to other clients) he would prefer
PRODUCTION parts of the reinsurance market is now
Allianz Re, told Baden-Baden Today.
to see a sustainable, functional market with no
unsustainable, buyers too are at the mercy of
AND Ahmed said DESIGN
that, as both a buyer and
wider market dynamics and must seek rate
seller of reinsurance (Allianz Re manages
“As a buyer, we don’t want shocks and
Fisherman decreases in line with market Creative
trends if they
Allianz’s reinsurance needs and retrocessional
volatility in pricing; we want stability,” Ahmed
are available, or risk losing a competitive
portfolio, and provides around €600 million
said. (Continued bottom of page 2)
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Intelligent Insurer – ISSN 2041-9929
prior year. But the bulk of it, £1.64 billion,
came from investment returns and foreign
exchange movements. The core underwriting
business contributed only £468 million to
the total. This has driven the management to
take action to improve underwriting quality
“After many years of competitive market
and reducing rates, Lloyd’s results were still
strong but we said it needed to be stronger,”
Hancock said. “We wanted more underwriting
profit,” he added.
Some improvement has been seen in the
2017 interim results. Lloyd’s reported pre-tax
profits of £1.22 billion for the first half of
2017, down from £1.46 billion for the same
period in 2016. However, it experienced a
reduction in its combined ratio to 96.9 percent,
down 1.1 percentage points year on year.
“Rate reductions are much reduced, risk
selection and risk management are so much
more important,” Hancock said. “That’s
reflected in the results of the first half year, with
a lot more to do going through this year and
next,” he noted.
Nevertheless, Lloyd’s is expected to post a
pre-tax loss for the full year 2017 due to the
nat cat events in the third quarter, according to
(Continued from top of page 1) to pay for the
catastrophe events, he added.
The amount of losses combined from the
nat cat events will exceed this year’s earnings
for the industry and become a capital event, he
“Some syndicates will need to put more
capital in. That’s absolutely normal and
expected,” Hancock said.
He stressed, however, that the hurricanes
will not turn into a solvency event for Lloyd’s.
This year is exceptional in terms of the level
of hurricanes activity, he said.
These losses come after the years 2012, 2013
and 2014 which were, for the industry as well
as for Lloyd’s, exceptionally low in terms of
frequency and severity of natural catastrophes.
“We felt that 2016 was a far more normal
year both in the industry and for Lloyd’s,”
Nevertheless, Lloyd’s reported underwriting
losses in all classes in the accident year 2016.
The market’s pre-tax profits remained
flat in 2016 at £2.1 billion compared to the
2 | BADEN-BADEN TODAY | DAY 3: Wednesday October 25 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com