NEWS
NewRe ready to deploy cat capacity
NewRe has cat capacity to offer the market—as long as the price and terms and conditions are right, says CUO Herrenpoth.
NewRe has cat capacity to offer the market—as long as the price and terms and conditions are right, Dirk Herrenpoth, chief underwriting officer, NewRe, told Baden-Baden Today.
Herrenpoth said he feels the business is in an enviable position. “We have capacity to offer but we are in the lucky position where we have no pressure to grow or to cut exposures.
“We are comfortable. We have been growing our property book steadily for the past two to three years. We like where we are, but we can offer additional capacity if the terms and conditions, the wordings, are right,” he said.
His comments, which echo those of his CEO, come with great nuance, however. He is clear that the market has reached a stage where structures and terms and conditions must be reviewed and readjusted—and only then might rates be discussed.
“A clean-up is necessary in the market,” he said. “During the long, soft market, when conditions were more in the favour of buyers, a lot of things sneaked in which it is now time to correct.”
He lists a number of things reinsurers are keen to review. Retentions will almost certainly go up. Loss corridors and the way frequency is addressed in some treaties will need to change. Reinstatements will come under scrutiny. Aggregations, especially in the context of how consecutive European storms have been dealt with, will need closer examination.
He stresses there is no hard and fast outcome reinsurers are seeking: it is just a case of achieving clarity so that pricing can reflect this. “We need to be clear on how coverage will respond in case of a loss,” he said.
“I am never afraid of losses—unless they are unexpected. We just need clarity and transparency.”
“We need to be clear on how coverage will respond in case of a loss.”
Dirk Herrenpoth, NewRe
Ready to quote
Despite this need to review structures, however, NewRe is unusual in that it is prepared to quote on business now. Many reinsurers are not at this stage; they are keeping their powder dry as they debate structures and work out what capacity they have to offer in some cases.
“It is too early for most markets to talk price; even clients are unwilling to talk rates at this stage,” Herrenpoth said. “But we are prepared to do that. We are confident; where we take a prominent role on programmes, we are willing to quote.”
He admits NewRe is helped by the fact it has little US cat exposure.
“Hurricane Ian was a ‘non-event’ for us. In contrast, many other reinsurers are counting the cost of that event and grappling with combined ratios likely to leap through 100 percent—for the third or fourth year in a row for many.”
In addition, many reinsurers face uncertainty around the availability and cost of their retro capacity—another problem NewRe does not face. But there is also nuance to his confidence of quoting on business this early. It will only be where the company is confident on the structures agreed with clients.
“We might say: ‘if you use this structure, this will be the price’. It is then the client’s call. But overall, we are confident that we can support our clients through this renewal.
“Our risk appetite has not changed. We are ready to deploy our capacity but the wordings, the terms and conditions, have to be right,” he concluded.
Main image: Shutterstock / Neptune's Aperture
