“If it is clear that losses are
very high we may send a client
the cheque before they have
“Especially on the reinsurance side, if it is
clear that losses are very high we may send a
client the cheque before they have submitted a
claim. We appreciate that people are suffering in
the aftermath of such an event and that is what
we are here to do. That is what differentiates us
in the eyes of our clients.”
He said Axis did this in the aftermath of
losses stemming from the Fort McMurray
wildfires in Canada in 2016. “On the
reinsurance side, if we can see that they have
blown through their reinsurance programme,
why wait? It is the right thing to do and it
certainly earns loyalty,” he said.
Benchimol added that he knows investors in
the company are prepared for such losses. “If
you cannot handle the volatility, you should not
invest in the re/insurance business,” he said.
“That is why the investor base in re/
insurance is relatively narrow. But that is not a
problem for us. The best companies are built
for this.” n
to the market to come up with some solutions
that allow them to access third party capital,
perhaps in such a way they don’t feel that they
have to buy an air-conditioner in the middle of
Goldie doesn’t believe single events will
change the structure of the market, even if they
end up being very significant.
“It’s a rate event, but it’s not structural
change. Some people say third party capital will
go away; I think it’s a mistake to think that way,”
Third party capital likely to dampen pricing peaks: Axis CEO Benchimol
Powered by: C ARLO TTOuesday DSeptemAber 12Y, 2017
Schroders launches ILS
life fund; Lohmann mulls
effect of buffer clauses
Asset manager Schroders is close to fully launching
Third party capital likely
to dampen pricing peaks:
Axis CEO Benchimol
INTELLIGENT INSURER’S MONTE CARLO TODAY
IS PUBLISHED BY NEWTON MEDIA LIMITED.
Registered Address: Kingfisher House,a new fund dedicated to life insurance-linked
The proliferation of sidecars, re/insurance
(ILS), according to industry veteran
funds and other instruments that enable
Dirk Lohmann, the CEO of Secquaero, the fund
21-capital 23 markets Elmfield investors to easily invest in Road,risk
BR1 1LT, United manager 50.1 percent-owned by Schroders.
transfer will dampen potential peaks in pricing
The fund Kingdom
and mandates being launched are
following big losses—but that does not mean
Schroder funds managed by Schroders. Secquaero
Email:that prices will not info@rise.
will be Schroders’ exclusive adviser on ILS
That is the view of Albert Benchimol, chief
executive of Axis Capital, who was speaking
Lohmann said the fund has commitments
www.to Monte newtonmedia.Carlo Today as Hurricane Irma
approached Florida. He stressed that while the
from a number of investors and some deals in the
pipeline. He expects the fund to be up and running
abundance of such vehicles in the industry will
by the end of October.
affect the dynamic around pricing, they will not
He believes demand for this form of risk
change the fundamental principles behind the
transfer is growing as large insurers and banks with
industry’s cyclical nature.
sizeable books of this long-tail risk on their book
“Pricing follows losses in reinsurance; in
seek to monetise the future value of such blocks of
a period of low claims levels, prices fall and
business now and free up capital.
Nicholas when claims increase, they rise,” he said.
Such is the size and complexity of many of
“The pace and extent to Lipinski
which prices change
these deals, only a small number of the biggest
is a function of the amount of capital in the
industry. If capital is low, they will rise quickly
reinsurers currently participate in this market.
And some of these players are increasingly wary
YOUR and decrease slowly CONTACTS as companies recover
IN MONTE of CARLO
taking too much of a concentration of this risk.
balance sheet strength. If the industry is
the extent and timing of how that happens
(Continued top of page 8)
capital rich, prices will be slower to rise and
that remain to be seen and could depend on
Wyn faster to decrease again.”
investors’ appetite to reinvest in the industry
He stressed Jenkins that losses stemming MANAGING from this
using these vehicles.
Analysis on p28
hurricane season will add to growing claims
“The fact is the industry has many of these
Telephone:levels in other areas of the industry +44 including
7715 vehicles already areas of the casualty side such as D&O. On this
Benchimol 770 in place 468
to write business,”
Digital transformation is
said. “Rather than form new
a top concern
basis, he expects that prices should increase;
companies, as used (Continued top of page 2)
Email:Harvey wjenkins@and Irma newtonmedia.will cause buyers co.uk
to rethink strategies
As losses stemming from hurricanes Harvey
proliferation of more third party capital, some
existing programmes, without really knowing
John and Irma Walsh become clearer PUBLISHER
in the coming
buyers have bought more aggregate coverage
where they stood.
weeks and months, buyers will be reevaluating
and what he calls “one-shot deals”.
“An interesting thing that will come out of
the nature and value of some of the reinsurance
But many insurers needed more time to
Harvey and certainly Irma—regardless of the
Telephone:structures they’re purchasing, Charles +44 Goldie,7803
establish what 047 their final 986
losses will be from
size of Irma—is that buyers will be thinking a
CEO of worldwide specialty at PartnerRe, told
the first storm. They were then forced to make
little bit more about what they’ve purchased,”
Email:Monte Carlo Today.
email@example.com about whether to buy more coverage
He believes that, driven partly by the
or whether they were comfortable co.with uk
“Whether or not Irma creates a big claim, it’s
THE FUTURE OF FARMING?
PRODUCTION JUST ADD A AND LOT MORE DESIGN
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PartnerRe is now a privately-owned reinsurer
after it was acquired by Italian investment
company Exor in 2016. Goldie believes that
ownership structure, away from the spotlight
of being a publicly listed company posting
quarterly earnings, allows PartnerRe to better
take on volatility and think about business with a
more long-term view.
“You look at all the events that have happened
in the last two weeks, and the volatility that has
created—our structure allows us to look at risk
very differently,” he said. n
Harvey and Irma will cause
buyers to rethink their strategies
(Continued from bottom of page 1) purchasers to say:
‘did I like that feeling of not knowing what my
loss was or where my reinsurance was?’ Some
may have had to go into the market when there’s
a category 5 storm in the ocean and there’s warm
water in the Gulf to purchase more coverage.”
A lot of third party capital offerings are
collateralised and have just one limit. If a
buyer exhausts that limit, it may need to find
seek another coverage. This is in contrast with
traditional reinsurers, where reinstatements are
commonplace on contracts.
Goldie said that having been through this
scenario, many buyers will look to their more
traditional partners to find solutions that mean
they do not end up in this position again. This
may mean still leveraging third party capital, but
in a different way, using a more holistic structure.
“Buyers will question whether they want to
go through that process again. They will look
2 | MONTE CARLO TODAY | DAY 3: Tuesday September 12 2017
www.intelligentinsurer.com | www.bermudareinsurancemagazine.com
submitted a claim.”
“Some people say third party
capital will go away; I think it’s
a mistake to think that way.”
(Continued from top of page 1) to be the case, that is
the quickest and most efficient way for capital to
enter the industry now.
“It may have the effect of potentially shaving
the peaks from pricing. The spikes in rates we
saw in 1993 or 2002 are unlikely to be repeated
but it should not mean that capital entering the
industry will not expect an adequate return.”
Axis Capital has itself embraced third party
capital in several ways in recent years. In 2016
it partnered with investment group Blackstone
to form total return reinsurer Harrington Re,
raising $600 million in the process. Meanwhile,
Axis Re Ventures manages capital for third
party investors in a number of ways including
through sidecars, insurance-linked securities
(ILS) and other strategic initiatives.
Stay calm and help clients
Asked how he prepares for potentially sizable
losses as a hurricane approaches the US,
Benchimol said that his first rule is to stay calm,
as experience shows that storms can change
path quickly. Once heavy losses are confirmed,
he said that is his company’s “chance to shine”
in the way it responds and helps its clients.
“We want to ensure we have a good handle
on the exposure of our clients so we can react
very quickly to help them,” he said.