Preparing for economic turbulence
The last three years have seen multiple economic shocks. Swiss Re’s CEO for reinsurance Moses Ojeisekhoba spoke to Monte Carlo Today about how the reinsurer assesses the unforeseeable.
The last three years have seen multiple economic shocks from the COVID-19 pandemic to supply chain issues, from inflation to the first European war in decades. The world’s economy is under strain in 2022 with potential recessions predicted in major economies. But all these things prove how a reinsurer’s job is to assess the unforeseeable.
That is according to Swiss Re’s Moses Ojeisekhoba, chief executive officer, reinsurance, who spoke to Monte Carlo Today about all these issues as well as the talking point that will be top of the agenda at this year’s Rendez-Vous: the hard (or hardening) market. Though a common term, it is not one that Ojeisekhoba likes.
“I don’t like the terms ‘hard’ or ‘hardening’ market,” he said. “I tend to think about the risk itself and what we need to do to ensure that we attach the right premium to that exposure or the risks that are being taken by the overall industry.”
Ojeisekhoba pointed to a time four or five years ago when there was far more exposure in North American commercial auto than the premiums being charged. This, he said, led to a point when insurers had to make adjustments that ensured the premiums charged reflected the exposure. That exposure was itself being driven by a combination of the frequency and severity of losses.
“You’ve seen that trend carry on into the shorter-tail lines, specialty lines, property. As we entered 2021/2022, there’s been a need for rate increases, driven by the greater incidence of climate change and especially around secondary perils, that match up with the exposure. We’ve seen that translate into the reinsurance market.
A sneak preview: more exclusive content and interviews inside
A sneak preview: more exclusive content and interviews inside
Why smart cycle management is key to ‘tricky’ nat cat line
An exodus of capacity from the property cat market has resulted in the best pricing in that sector since 2006—and this means a clear opportunity for reinsurers, says Nancy Bewlay.
Nancy Bewlay, chief executive officer of AXA XL Reinsurance, is crystal clear on her remit: to add value to parent AXA Group. This also means smart cycle management and knowing when an opportunity presents itself, such as in the capacity-short property cat space right now.
An exodus of capacity from the property cat market has resulted in the best pricing in that sector since 2006—and this means a clear opportunity for reinsurers able and willing to operate in that space, Bewlay told Monte Carlo Today.
Bewlay, who took the reins of the reinsurance unit of AXA XL in March, replacing Charles Cooper, admits that property cat can be “a tricky space” and stresses the business will not accept too much volatility. But she is clear that competent and experienced players in this space, such as AXA XL Reinsurance, can reap the rewards of the cycle.
“We are still a big provider of nat cat capacity; there has been a big loss of capacity in that market, so we do see growth potential,” she said. “We manage our cat book carefully and strategically deploy our capital with a view on controlling our nat cat volatility.
