Cover story

New beginnings at Hannover Re

On July 1 Chantal Cardinez took over as the chief executive officer of Hannover Re Bermuda. Bermuda:Re+ILS caught up with her to talk about her plans for the business and her views on the levelling of the playing field for women in senior roles.

“COVID-19 will no doubt be a catalyst for the way the industry deals with risk and the way the average person thinks about it.” Chantal Cardinez

Chantal Cardinez has been at Hannover Re in Bermuda since 2008, taking over as chief executive of the life and health (L&H) business in 2015. Since July 1 she has been chief executive for the whole Bermuda business, having succeeded Konrad Rentrup, who retired after spending nearly 20 years leading the business.

There is no escaping the significance of a woman being appointed to such a senior role. Cardinez is not the first woman to be appointed as the chief executive of a re/insurer in Bermuda, but there is a relative scarcity of women in such senior positions.

She argues the topic of level playing fields requires a broader perspective that looks beyond the question of gender specifically—and beyond the shores of Bermuda too.

“Even in a narrower focus of gender, we have to acknowledge that there are so many factors influencing the current perceived or actual status,” she explains.

“On any topic there are ‘facts’ and there are ‘feelings’. Both are relevant when we have the discussion on topics like these, and in the eye of the beholder. Knowing where we really stand is therefore a function of the cumulative opinions in regard to facts and feelings on the topic.”

Re/insurance companies have been working hard to achieve a level playing field, Cardinez says, but companies are operating amid other constraints.

“Societal factors play a role,” she says. “For example, there still appears to be a bias towards mothers being the primary caregivers, with all that entails.

“As a society, we are therefore not levelling the playing field. Companies who recognise this have made greater strides in creating environments where equal opportunities exist.”

Cardinez says there is no magic formula for success that she can pass on to other women looking to follow in her footsteps and carve out successful careers in re/insurance.

“I can point to no single step I took that can explain my achievements,” she says. “Everyone has their own very individual experiences.” It is, however, in the interests of the industry that more women reach the upper echelons of management.

“Women leaders tend to have a different leadership style than that of their male counterparts,” she notes. “It is not better or worse but it certainly supports a more diverse set of leadership principles.

“We should not try to change it; instead, we should embrace it. This has a trickle-down effect on multiple fronts in the organisation and makes for an overall more inclusive culture.”

Cardinez emphasises the different traits that women typically bring to these senior positions.

“Centuries of social norms have inevitably led to women being more self-aware and socially aware, something we have a nice label for these days: ‘emotional intelligence’,” she says.

“Being empathetic, having a strong sense of self-motivation and self-regulation and then being able to instil that, through leadership style, into the wider organisation is what I believe leads to some of the benefits women bring to the table.

“I suspect that the cornerstone of a higher emotional quotient, when combined with intelligence quotient, will provide for a higher probability of success.”

At the same time, Cardinez is careful not to overplay the diversity card.

“We need to be careful in terms of how we think about diversity,” she explains. “I knew a team of 16 people that included people from 12 different nationalities. On paper it looked very diverse, but 90 percent of them fit the same personality profile because they all shared the same technical training.”

Bringing businesses together

Cardinez has wasted no time making her mark on Hannover Re.

“In addition to taking over responsibility for our Bermuda based P&C entity, I will be retaining my responsibilities for our Bermuda based L&H so, for the first time, we will have management responsibilities spanning both legal entities,” says Cardinez. “As such, we have decided to combine the two into one dual licence entity, subject to regulatory approvals.”

The unification of the two sides of the business is expected to take around 12 to 18 months. The combined entity will continue to write and expand its portfolios on both business segments—a business as usual mentality, she says.

Logistically, bringing together two teams into one will present challenges. “Over the short term, my focus is to ensure the merger implementation is a success operationally and that includes creating a unified culture in the new entity,” says Cardinez. She insists that the motivation for the reorganisation is not cost savings.

“Actually, we will be investing more in the business in some areas,” she says. “For example, in bringing the teams together we will build out the human resources function to fit the scale of the combined operation.”

Merging the businesses has given Hannover an opportunity to review its office space at precisely a time when businesses are wrestling with the challenge of bringing employees back into shared spaces safely, amid continuing COVID-19 pandemic concerns.

“When thinking about the new merged Hannover Re office we foresee our team members spending more than 25 percent of their time working from home,” says Cardinez.

“We want to encourage a more collaborative style in the space. It is a good time to be able to approach this with a clean slate.” Cardinez admits she has taken over Hannover Re at a challenging time given the COVID-19 pandemic, but she is sanguine about the industry’s ability to adapt and thrive.

“COVID-19 will no doubt be a catalyst for the way the industry deals with risk and the way the average person thinks about it. We have all learned lessons over the last few months and while it will certainly affect some of our tactical decisions, I don’t expect it to have a fundamental impact on our overall strategy as a reinsurer.

“It has brought new challenges to the industry but we are equipped to deal with it.”

She acknowledges the impact the pandemic has had on the way re/insurers conduct their businesses, some of which she is looking forward to seeing the back of, and others she expects to persist after the virus is contained and pushed back.

“Having frequent face-to-face time has tangible advantages in this industry,” she says. “There are some benefits that simply cannot be replicated with videoconferencing. We are probably not returning fully to the old 8-to-6 way of working, so the challenge for management will be how to adapt and find the right new balance.”

Understanding the trends

COVID-19 is not the only challenge the industry currently faces. While many re/insurance executives are basking in the joys of rising prices and a feeling that the balance of power when negotiating renewals is shifting towards them, Cardinez prefers to focus on the underlying trends driving prices.

“We need to consider why prices are expected to rise,” she explains. “The most obvious reason is an increase in the frequency and severity of losses. Where we have seen significant loss activity, the rationale for price increases is expected and accepted.

“This varies by market and line in terms of how much progress has been made towards achieving technically adequate prices.” A second factor driving price rises, she notes, is competition for capital driven by the natural market phenomenon of supply and demand.

“This requires risk-takers to consider whether they can continue to support inadequately priced exposures, irrespective of limited loss activity, when capital can be put to work on portfolios that actually do meet target requirements,” says Cardinez.

“We do expect price momentum but whether we will see prices reach new levels remains debatable.”

Cardinez cautions that re/insurers need to keep in mind the issue of affordability.

“As loss frequency and severity increase so do prices, but if we want to narrow the protection gap we have to balance affordability against the value proposition to customers,” she says.

The industry as a whole needs to be more forward-thinking in its risk assessments, Cardinez argues—particularly at a time when climate change is causing a fundamental shift in weather patterns and the likelihood of natural disasters. COVID-19 has redefined peoples’ view of risk with regards to pandemics, but also broader economic expectations.

“We need to think more about the risks covered, and ensure the policy wordings reflect what we intend to cover,” says Cardinez. “In addition, we need to think about how perils themselves are changing. No-one can predict how climate change will affect perils in the future, but everyone is working on it.”

The industry can do more around risk mitigation, she adds, which is important if risks are to remain insurable despite the increasing frequency and severity of losses.

“We can deliver huge value to customers not only by reimbursing swiftly for losses as they occur, but also by using our knowledge and expertise to minimise and mitigate the losses before they happen,” she says.

“This is very clear on the life and health side of the business where a lot of thought goes into understanding predictors of health outcomes and allowing them to serve as warning signs to our customer, ultimately prolonging a healthy lifespan.”

Image: Chantal Cardinez

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October 2020

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