Baden-Baden
Think globally on renewals: AXA XL Re
The re/insurance sector is facing a myriad of challenges the complexity of which it has rarely seen before: cat losses in almost every continent this year, inflation, social inflation, economic turbulence, and geopolitical uncertainty.
“We prefer to work with clients on multiple lines of business.”
Bertrand Romagne, AXA XL Re
Now, more than ever, it is time for reinsurers to help cedants by leveraging their global view of risk and books business, according to Bertrand Romagne, chief executive officer of international reinsurance at AXA XL.
He notes that reinsurance is an international business, and reinsurers should be clear about this when dealing with cedants. Rates will harden, he suggests, and many reinsurers will be keen to deal with clients on a case-by-case basis, taking long-term relationships and global exposures into account.
“We prefer to have conversations on a global level and based on valued long-term relationships we have with our clients,” Romagne said. “We prefer to work with clients on multiple lines of business, from cat to casualty to marine, where we can take significant positions. This is a global market, and we want to help.”
He stresses that AXA XL Reinsurance wants to offer more than just capacity. Instead, he sees the business as selling a service. “We are selling our knowledge, our expertise, our ability to help clients manage their businesses. We are part of a big group that has an abundance of talent and resources. Let’s not get bogged down talking only about rates and capacity,” he said.
He accepts that inflation will mean greater demand for reinsurance. He believes that this, in the absence of any new capacity, will precipitate a further hardening of the market. While property-cat business may drive this, it will also be a much more global phenomenon, not limited to any particular lines of business or geography.
This means that European cedants heading to Baden-Baden will face a tougher renewal than they might have expected based on their own portfolio in isolation. The global nature of the industry, including loss activity in the US because of Hurricane Ian, will also have an impact.
That said, Romagne notes the losses seen in Europe this year. Significant cat losses have occurred in Germany, France and Italy. “The whole market has faced challenges. No company has avoided the turmoil. But we are part of a bigger system when it comes to risk and that’s the purpose of reinsurance. We’ll speak to clients on a case-by-case basis but this is a global market we are operating in,” he said.
“There is clearly a mismatch between supply and demand”
He believes that the dynamic around the renewal should not focus only on rates and that structures need to be fundamentally re-examined in some cases. “Clients will need to think about things such as retention levels and what sort of coverage they really need. It will be a discussion between price, cost and benefit.
“There is clearly a mismatch between supply and demand. You cannot change the supply, so maybe you need to look at the demand, and looking at the structure of the programme structure is part of this,” he concluded.
Image: Shutterstock / Dikushin Dmitry_Portrait
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