INTERVIEW: TIM RONDA, HOWDEN TIGER
Strategic creativity the only way to solve complex challenges
A broader approach to thinking about the different groups within the firm could provide value to clients and those areas that are the most supply and demand-imbalanced.
“In a challenging market, the way you solved problems last year isn’t necessarily available to you this year; you need to be creative. If you simply apply last year’s strategy to this year’s challenge, it’s going to fail.
“Creativity involves new reinsurers, different structures—and being open to ideas, finding a different way to solve problems each year.”
Tim Ronda, president of Howden Tiger, wants to help clients solve problems. This means, he argues, that creativity and innovation must now be crucial elements of the broker’s strategy. He is an advocate for finding new ways to solve problems for the clients of what is now the fourth largest global reinsurance broker.
“Any time you have a complex problem, there isn’t just one way to try and solve the problem, you have to solve it in 10 different ways,” he says.
The company certainly has more options at its disposal these days. The Howden Group acquisition of TigerRisk Partners for around $1.6 billion completed on January 9, 2023, created a new force in the industry. And, as the integration of the two companies roars ahead, Ronda says the company still has big growth plans.
“The integration is going well, it’s a relatively easy one to work through because it’s all about adding capability, rather than reducing expenses,” he says.
“Not one job has been lost as a result of the transaction because the two firms have very complementary teams,” he adds.
“Our integration strategy is going very well, so we’re going to achieve in excess of 20 percent growth this year. More importantly, we’re adding capability, by product and by geographic region around the globe, so that we have a complete offering to give to our clients.”
In an development relatively unusual post-merger, the broker has onboarded more than 175 new colleagues in the last 12 months as part of a recruitment drive to round out its global product and regional capability.
Client service was at the heart of both companies, he says, and remains the core of Howden Tiger. “We want to keep adding capabilities so we could add to our client service,” Ronda says.
This positive growth outlook belies the tough backdrop into which the broker debuted. The re/insurance landscape of the past couple of years has featured increased frequency and severity of property-catastrophe events around the world which, combined with an inflationary environment, has driven challenges in some of the long-tail lines claims, as well as an uptick in claims activity in some professional lines, he says.
“I’m proud of the way the Howden Tiger team used creativity and innovation to provide solutions for our clients.”
Tim Ronda, Howden Tiger
“We’ve been in this environment where insurers and reinsurers may not have been generating the returns that they or their shareholders require, and they want to operate in the long-term world. Change needed to happen and that was in both insurance and reinsurance in coverage restrictions and price increases. That’s always hard to take.”
Ronda thinks the market as a whole has responded very well. “I’m proud of the way the Howden Tiger team used creativity and innovation to provide solutions for our clients in that challenging environment,” he says.
He points to an example that illustrates the success of the Howden Tiger integration.
Without his naming names, one of the firm’s very large clients on the insurance side was looking to complete its insurance placement in a challenging field.
“We helped that original insured get its insurance done with some combination of insurance, facultative reinsurance and treaty reinsurance. There were three different groups of people, two groups within Howden Tiger and then Howden Tiger working with Howden’s insurance operation to complete this transaction.”
He says the placement was vital to the client, a very significant client to the Howden Group.
“If the insurance team had approached it only from an insurance perspective, the client probably wouldn’t have got the deal done. But because they reached out and were able to be creative across multiple divisions, we were able to get the coverage for the client, which we were very excited about.”
A more orderly market in 2024
An upbeat Ronda is optimistic about the next 12 to 18 months; he sees opportunities ahead.
He explains: “Because of the challenges of the last two years, I think we’re going to have a more orderly re/insurance market in 2024.”
Pricing levels and terms and conditions have allowed many, if not most, of the product lines around the world to provide a reasonable margin.
Such confidence and relative stability will allow Howden Tiger, and the wider industry, to start thinking about growth—in exposures as well as premium growth.
“That healthy market is going to allow us to start thinking about forms of innovation because in the last two years, whether it’s climate-related products or any other form of new product, it’s been more of a challenge to get our re/insurance partners to think about innovating new products when they’ve been so focused on making sure that their core product offering is being done and priced at the appropriate level,” Ronda says.
“The last two years’ disruption has led to a healthier re/insurance market.”
The opportunity is expected to arise from the relative greater stability of the re/insurance market in 2024 because it will allow people to grow in those core lines with confidence that they’ll see profit.
Renewed market equilibrium will allow Howden Tiger to develop what’s been a challenge, which in Ronda’s mind has been a lack of willingness in the industry to innovate with new products.
“Any form of new volatility was a scary thing for re/insurance in the last two years,” he says.
“It seems that the last two years’ disruption has led to a healthier re/insurance market,” he adds.
The challenges for re/insurers looking ahead will be based on how they think about continuing profitable growth, he explains. They’ll need to consider maintaining the current levels of profitability and how they can add in new products or new regions in a diversified way that allows them to expand on their core offerings.
For Ronda these are going to be some of the challenges for re/insurers over the next three years.
“There’s been lots of talk over managing general agents (MGAs) and fronting companies. The premiums and the risks they’re all producing have to be profitable, right, so thinking about profitability, whether you’re an MGA or a fronting company, or a traditional balance sheet business, and about how you write gross, profitable business throughout the cycle is going to be a focus for management.”
Diversity needed
Another challenge that the industry faces collectively centres on talent, Ronda says. “It encompasses attracting people, retaining them and ensuring colleague satisfaction. It’s an issue that many across the industry recognise only too well.
“Re/insurance is a changing business, with changing needs, but the industry could do more in terms of developing and recruiting diverse talent into our business.
“Whether you’re an insurance company, a reinsurance company or a broker, talent retention, colleague engagement, and a diverse approach to solving client problems with a diverse talent set is going to be even more of a challenge in the future.
“There’s quite a bit of competition for talent out there.”
It isn’t just competition for talent or the opportunity for greater product innovation that Ronda sees ahead. He is clear that the industry as a whole, including Howden Tiger, needs to be on the leading edge for technology and using technology such as artificial intelligence.
He welcomes the ability to increase speed of service and lower expenses, for example, as well as the potential to bring about tremendous change and efficiency in how re/insurance industry players approach business.
“Companies that embrace the technology are going to be net winners. Companies that ignore the technology are going to find that other people are moving past them.
“That said, re/insurance is an very relationship-based business. Technology will never replace the importance of relationships.”
Relationships today are built in a different way from those of 20 to 25 years ago, he says, but the industry has evolved and what constitutes a great relationship is different now from back then.
Ronda says there’s a balance to strike, where industry professionals push themselves to ensure they’re as forward-thinking as they can be about embracing and pushing new technologies that allow for efficiencies in the business. At the same time, it’s important to understand that relationships matter and service matters more than anything else in the world.
“We want to make sure that we’re embracing technology in a way that doesn’t impact negatively on those relationships.”
A multifaceted strategy
Any strategy for the current and future market needs to embody a multifaceted approach, Ronda says. For example, very high quality client service and attention to detail are a given. This means making sure that the analytics work, and the relationship management and the broking are done with perfection that feels seamless.
“The expertise with which a deal is handled has an impact on the end outcome for our clients,” he explains.
Creativity is another strategic element for Ronda, who advocates for looking for new ways to solve problems. Applying the previous strategies to this year’s challenges isn’t going to cut it. Howden Tiger’s approach means considering new reinsurers and different structures, while being open to thinking about a completely different way to solve problems each year.
Creativity can make a big difference in some of the most supply and demand-imbalanced areas, he says, referring to anything that has property-cat exposure.
“People feel much more confident in their balance sheets today than they did 12 months ago.”
“We are thinking about the supply side of the house and different ways that we could include some index-based products into a catastrophe programme, but doing it in a way that there’s very little basis risk added for our client. We make it a safe way for them to attract some new capacity.”
He explains that for Howden Tiger this could mean thinking about how to include the firm’s facultative team in a property-cat strategy in a way that makes sense for both markets. It could also mean thinking about how to tie capital markets and the insurance-linked securities (ILS) team into solving client problems.
“We have to be broader about the way we think about the different groups within Howden Tiger that could provide value to our clients and those areas that are the most supply and demand-imbalanced. Property is probably the one that has been most supply and demand-imbalanced in the last two years,” he says.
Time is Ronda’s third strategic element. Time matters, he says, whether it’s the amount of time you spend with the client, or with the reinsurers. Whether you’re on a particular reinsurance deal or one particular client problem, time really matters.
“You can’t do something in one call, as was possible to do 10 years ago in a different market. It takes 20 phone calls and having that persistence and continual effort.”
1/1 2024 renewals
After the testing conditions that enveloped last year’s renewals, Ronda expects the 1/1 2024 renewal to offer a much more stable environment for reinsurance placements into the new year.
“If there’s a cat event around the world that is a surprise, obviously that could change things. But absent that, we believe that the cumulative impact of the last two years for insurers and reinsurers has allowed people to believe they have profitable portfolios,” he says.
He acknowledges that challenges remain with respect to inflation, loss trends, including the recent landfall of Hurricane Idalia in Florida, as well as ongoing cat activity around the world.
“People are going to be highly sensitive to that. We will try to understand the long-term impact of some of this climate change. But people feel much more confident in their balance sheets today than they did 12 months ago,” he says.
“Rates and terms and conditions are very different from two years ago. We’re expecting a much more stable and consistent 2024 after what was a relatively turbulent 2023.”
Tim Ronda is the president of Howden Tiger. He can be contacted at: tim.ronda@howdengrp.com
Images, from top: Shutterstock / beanimages, Duet PandG