Embracing its true destiny: QBE Re commits to Bermuda

QBE Re is entering the start of a new era for its reinsurance operations—one in which it can innovative and flourish under new leadership and within favourable market conditions. What is more, its Bermuda operations will play a central part in this future.

That is the perspective of Tracey Gibbons, head of office, QBE Re, who took the reins of the business in September in a move that epitomised the start of a new chapter for the business. In fact, her appointment was just the latest significant hire that would inform the company’s future reinsurance strategy.

In February 2020, industry veteran Steve Postlewhite joined the business from Aspen Insurance as managing director of QBE Re globally. In October 2020, Jason Harris joined the business from AXA XL to head its international division. Then, around the same time as Gibbons appointment, Andrew Horton moved from Beazley to become the chief executive officer of the whole of the QBE Group.

Gibbons joins from SiriusPoint where she was senior vice president, bringing over 30 years’ experience to the role and a remit to develop the Bermuda product offering to QBE Re’s platform. She had previously held senior roles at Third Point Re and Allied World. In her new role, she will report to Postlewhite.

Her appointment prompted the announcement that David Cary’s role will also expand. Already SVP underwriting manager and head of property and casualty Bermuda, Cary will now also assume responsibility for the day-to-day line management of the growing underwriting team in Bermuda. Finally, Greg van der Made was appointed treaty underwriter to the Bermuda office, also joining from SiriusPoint.

“Our focus is improving the resilience and preparedness of our communities to the effects of climate change.”

Right move, right time

Gibbons says she was attracted to the role because of the opportunity she believes QBE Re has to become a real force in the market—and its commitment to inclusivity and diversity as well as tangible environmental, social, and corporate governance (ESG) targets also played a role in convincing her.

“QBE is going through a period of change,” she says. “There have been a number of new hires, and these have instigated a renewed appetite for reinsurance business, something that has coinciding with better market conditions.

“QBE is a very strong company with a strong balance sheet. The opportunity now is to embrace our true destiny as a significant and respected player in market.”

She says that approach, in turn, meant taking a fresh look at the nature of its presence in Bermuda. It has had a small presence in the market for a while but it is now transitioning that into a fully staffed branch office that has the ability to make a significant difference to QBE’s bottom line.

“The opportunity for me was to build a team, find the right talent and create an authentic and inclusive culture. It was a no-brainer to say yes to the opportunity,” Gibbons says.

The office has already grown to four staff, and this will increase to five in January. “But we will continue to assess the opportunities in the market and how we combine those with the available talent on-Island. We have no desire to be a follow market; rather, we will build a team of lead underwriters capable of leading in both thought and their relationships with clients.”

Gibbons says QBE Re sees Bermuda as pivotal to its future success for a number of reasons—one of which is the fact that Lloyd’s remains so archaic and slow in the way it does business, she says. In contrast, she sees the regulatory regime in Bermuda as forward-thinking and able to adjust to a rapidly changing market.

“The Bermuda market has always been very nimble due to its culture and regulatory environment,” she says. “There is a very robust support network here of professional companies dedicated to this type of business. That means this is an environment from which we can take advantage of the opportunities that come our way in the market. The next five to 10 years will be very interesting.

“In contrast, questions are still being raised over the viability of the Lloyd’s business model—as we move away from archaic ways of transmitting information, Bermuda is in a much better position. Having a Bermuda office and a strong presence here puts us in a strong position to take advantage of what the Island has to offer.”

Banter, but less needle

Despite the perhaps growing differences, Gibbons believes the relationship between Bermuda and Lloyd’s is stronger than ever. She says that 20 years ago, there might have been more needle in the “banter” between the two markets. “Now, both markets realise they have a role to play,” she says.

This special relationship was illustrated by the recent visit of Lloyd’s chief executive John Neal to the Island in November. During the visit, Neal was quoted as saying Bermuda was one of only two credible reinsurance markets—the other one being London.

“Bermuda provides a lot of capacity to London and vice versa while many Bermuda companies have Lloyd’s platforms. It is a symbiotic relationship,” Gibbons says.

But Bermuda is better place to adapt and innovate, she maintains. She points to how it has done this over the decades: from its roots as a captives hub to providing excess-of-loss insurance to catastrophe reinsurance to insurance-linked securities (ILS) and now life business.

She notes Bermuda’s location between the two markets of the UK/Europe and the US, and the world-class regulator that always looks to understand businesses. “That enables us to be nimble—something Lloyd’s struggles with,” she says. But there are other benefits.

Gibbons cites the strength of the Island’s trade associations: the Association of Bermuda Insurers and Reinsurers (ABIR), the Association of Bermuda International Companies (ABIC) and Bermuda International Long Term Insurers and Reinsurers (BILTIR), all of which represent the interests of the Island’s different companies on the international playing field.

“Bermuda is a one-stop shop for those looking for coverage of any type of risk—every type of business is represented. You can literally go door to door. We have centres of excellence in many different products now—it is so much more than the cat business we were once known for.

“All that brings talent to the Island—people want to be part of the very entrepreneurial market that has developed here. It is also important to note how diverse the workplace is, which makes for better business outcomes, and how amazing a place it is to live and work. “Do not understate how attractive it is just to have Bermuda as part of a reinsurance placement,” she says.

Not so hard

Gibbons’ new role, and QBE Re’s new-found zest for reinsurance, has coincided—accidentally or not—with favourable market conditions in reinsurance, a response to several years of losses and underwhelming returns and the uncertainty and further losses triggered by COVID-19.

Plenty of reinsurance executives are referring to what is happening as a “hard” market, Gibbons is reticent to use that term. She acknowledges that some lines of business, especially loss-affected property lines and cyber, have seen huge rate increases. In contrast, others have seen little change—and some capacity is withdrawing from some areas.

“The picture is mixed. Some lines have seen little or no improvement and, even where we have seen rate increases, there is a question over whether they are adequate. The exposures have also increased dramatically, so they are not necessarily adequate rate increases,” she says.

“I don’t think we are in a hard market—maybe it’s a slightly less soft market. We are starting to see some pullback of capacity in property—carriers are concerned they are not capturing the true exposure and probability of losses especially in the context of climate change. The market is responding to that.

“In the cyber market, there is nowhere near enough capacity to cover the true exposures. And anything involving communicable disease has a blanket exclusion. The fundamental issue is whether we have achieved technical adequacy in the rates when you consider the true exposures. I think some underwriters are kidding themselves they are in a hard market.”

More than lip service

Gibbons is clear that one reason she was swayed to join QBE was its approach to ESG, and the associated values around diversity and inclusion. “These values are dear to my heart, and it was important that any company I joined paid more than lip service to them,” she said.

She notes that QBE looks at ESG considerations in every decision it makes now and has a very detailed sustainability report, with its targets, on its website. Some of the highlights that illustrate this commitment include: 40 percent of all leaders being women by 2025 (it missed its previous target of 35 percent by 2020 by a whisker); 30 percent of board members being women (it has achieved that now); net zero carbon emissions globally by 2030; a 25 percent reduction in energy usage (from a 2019 baseline); and net zero greenhouse gas emissions in its investment portfolio by 2050.

In addition to all that, Gibbons is a champion of the QBE Foundation. “I am really proud of the QBE Foundation which was established to enable us to make a difference in the communities in which we operate. Our focus is improving the resilience and preparedness of our communities to the effects of climate change, through long-term partnerships to help people to help themselves,” she says.

“In Bermuda we are not strangers to the effect that the climate or climate change can have on our day-to-day life. Globally we have partnered with the Red Cross and Save the Children which is being supported by our regional offices to help better prepare our communities and build resilience to the effects of climate change, and to provide support after any disaster. “I am very excited to be joining QBE Re at this stage in its development,” she concludes.