INTERVIEW: MATTEO CUSSIGH, PEAK RE AG
European appetite and attitude shifts offer new opportunities for Peak Re AG
The Zurich-based venture will help establish parent company Peak Re as a global reinsurance group.
Changes in the European re/insurance market’s risk appetite and a shift in the attitude of other insurers offer fresh opportunity for Peak Re AG on the continent.
This was the view of Matteo Cussigh, chief executive officer of Peak Re AG, speaking to Baden-Baden Today.
Founded in 2016, Peak Re AG is the Swiss subsidiary of Hong Kong-headquartered Peak Re. “We’re a still relatively new venture and the idea is to be a substantial part in the process of establishing Peak Re as a global reinsurance group,” Cussigh says.
The focus of the business, based in Zurich, is to support the development of European business, helping the group to expand its footprint in Europe and maintain relationships with cedants and companies based on the continent.
“As a result, the majority of our book consists of European business. We participate in a few selected areas outside Europe, but by and large, the book is composed of treaty business from Europe.
“As you might expect, the majority constitutes property, motor and casualty business, and almost exclusively P&C at this stage.”
Peak Re AG had a baptism of fire operating through a run of “interesting” years for the global industry after its launch in 2016.
“As an industry, we suffered from the frequency and severity of nat cat losses which affected Europe in the last few years. Then, in 2022, there was the rapid increase in interest rates, which had a negative impact on our asset portfolio.”
The business took action ahead of the 1/1 2023 renewal, adjusting its portfolio to improve technical profitability and to get rid of the parts of the business and elements of the portfolio which were not performing in line with expectations.
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“The majority constitutes property, motor and casualty business.”
Matteo Cussigh, Peak Re AG
“How satisfied am I with my portfolio now? Much more satisfied than 10 months ago, that’s for sure. Our 2023 results are better and the measures we introduced have had a positive effect on our book,” Cussigh says.
However, he adds, such adjustments have resulted in a reduction in premiums in Europe. “We took very drastic measures, but we are now on a sound footing. We have now a much stronger and better quality portfolio for the future.”
This will stand the business in good stead as it tackles what Cussigh describes as today’s “complex and dynamic reinsurance landscape in Europe”.
He expects the industry to see large nat cat losses in 2023, and pointed to the Turkish earthquake in February as an example.
“The increase in frequency and severity of nat cat losses and the inflationary trends are two phenomena which are difficult to contain and control. At this stage, our focus should be on proactively managing them,” he explains.
Transparent partnerships
Peak Re AG is monitoring what is happening on the insurance side and Cussigh says reinsurers will re-enter 1/1 renewal talks expecting cedants to share what they are doing on the premium side in response to issues such as high inflation and rising extreme weather events.
Outlining the general framework that reinsurers operate in, he says that insurer narratives should articulate how they will ensure that the premium changes and increases are sufficient to counter the inflationary trends and increasing claims costs.
“We’ll need to know how insurers are changing their underwriting policies to account for the increased frequency of nat cat losses.
“They’ll need to communicate how they are adjusting the reserves because ultimately inflation and increasing claims costs impact reserves.
“Then, how are insurers adjusting the terms and conditions in their policies to make sure that we know precisely what is covered and what is excluded?”
“We have now a much stronger and better quality portfolio for the future.”
Keeping risk under control
Cussigh flagged growing concerns around strikes, riots and civil commotions as a difficult macroeconomic situation persists across Europe and the spectre of recession looms.
“The market had losses as a result of events in France this year, and we cannot rule out that we’ll have similar situations in other countries. For me, this is an aspect of risk to be kept under control, especially given the implications on the property side,” he says.
Unmodelled perils remain an issue for the industry in 2023, with Cussigh emphasising that they are the major driver of nat cat losses in Europe. While they are nothing new, they remain “centre stage” for re/insurers, he says.
In terms of opportunities, he is more optimistic, pointing to changes in risk appetite and the attitude of other reinsurers as an opening for a relatively new player in Europe such as Peak Re AG.
“We see movements in the insurance panels, and on the different lines of business in terms of what reinsurers are willing, and not willing, to write.
“The reasonable expectation that the hard market will remain for 2024, combined with the need for reinsurance capacity, and the fact that reinsurance capacity is scarce and appreciated by cedants, is offering many interesting business opportunities to Peak Re AG,” he concludes.
Matteo Cussigh is chief executive officer of Peak Re AG. He can be contacted at: comms@peak-re.com
Main image: Shutterstock / SilvanBachmann
