INTERVIEW: NICK BENARDOUT, PATRIA RE MARKETING SERVICES
Patria Re to drive diversification
London-based Patria Re Marketing Services is building a property treaty portfolio in territories outside Latin America, says Nick Benardout.
Patria Re has big ambitions outside its established stamping ground of Latin America, ambitious growth plans that are supported by London-based, wholly-owned subsidiary Patria Re Marketing Services (PRMS).
The reinsurer is keen to increase its geographic diversification and is busy growing a property treaty portfolio in territories outside Lat America, Nick Benardout, director at PRMS, told Baden-Baden Today.
Benardout joined the company in 2017 to run the syndicate that was started by Patria Re in 2016. That went into run-off at the end of 2020, he said.
“We’ve reinvented ourselves outside the Lloyd’s market in the company/managing general agent (MGA) market. My role is to raise the profile of Patria Re outside Latin America and to grow a property treaty portfolio in territories away from Latin America to bring geographic diversification to the company.”
Since leaving the Lloyd’s market two years ago, the income produced by the London office has trebled, he said. One of the key reasons for that is that the subsidiary has control over its business.
“We’re able to deploy capacity without restraint. We also have a much lower expense ratio—Lloyd’s was quite prohibitive in terms of costs.
“Now we are back in the company/MGA market where we can write business with greater margin. From an income perspective, we’re doing very well, our profile is growing every year. We’ve been well received by the marketplace as we grow the brand outside Latin America.”
“We’re in a rapidly intensifying hardening market.”
Nick Benardout, PRMS
A domino effect
For Benardout, the biggest influences on the market are the three ‘I’s: “Hurricane Ian that recently went through Florida, inflation, and ‘insurance to value’.”
He said that the three ‘I’s are causing lots of consternation in the marketplace, which has created a kind of domino effect.
“One of those ‘I’s’ in isolation is not causing problems but when you have multiples, one domino knocks over the other and we’re now getting a trail of knocked-over dominoes compounded by other recent major market loss events such as COVID-19, aviation war in Ukraine, California wildfires, Japanese typhoons, and Australian and German floods, to name a few.
“That’s causing supply issues in the marketplace, a changing rate environment, so we’re in a rapidly intensifying hardening market, something we’ve not seen for many years.”
Benardout said that when he speaks to his peers in the marketplace, it seems that we’re going back to 1993, a year after Hurricane Andrew.
Benardout said reinsurers are certainly going to expect and want significant price increases at the 1/1 renewals. He also expects retentions to go up, so insurance and reinsurance companies will have to retain more risk.
“The most important points are the supply crunch and the retro market. A lot of reinsurers rely on retrocession capacity to survive as part of their business plan, or their business model, and we’re seeing a significant contraction in retrocessional capacity. That has a knock-on effect down the chain. Business has to stand on its own two feet.”
“Our ambition is to continue to raise our profile in the international market.”
This means reinsurers will have to take more risk and insurers will have to take more risk than that. “On top of that we’re going to have to put more premium into the market for the business we write,” he said.
With growth a key business goal, Benardout is acutely aware of being a “very small reinsurer outside Latin America”, although Patria Re has a large profile in the region.
“Our ambition is to continue to raise our profile in the international market. We’ll be out on the road marketing ourselves at various conferences. And ultimately, we want to mirror the strong reputation that Patria Re has established in the Latin American region and become a local reinsurer with a global presence. That’s our ambition.”
As to the main talking points at Baden-Baden this year, Benardout said Hurricane Ian will certainly be a discussion point for markets that are writing US-exposed business.
“Retention levels will be a key focus of discussions. A lot of cedants will have to push up their retention to retain more risk, they’re going to have to pay more for their reinsurance. Reinsurance capacity will not be readily available,” he said.
A number of markets have exited the class, a number of Lloyd’s syndicates in particular have pulled out, so available capacity will be more difficult to come by.
“Many ceding companies will be looking to buy more limit, mainly driven by an increase in business interruption exposures, particularly as a result of inflation, increasing energy costs and supply chain issues. So more capacity is required, but less is available. It’s going to cause squeezing in pricing for sure,” he concluded.
Nick Benardout is a director at PRMS. He can be contacted at: nick.benardout@patriareuk.com
Main image: Shutterstock / arzualtincicek
