The rise of secondary perils that affect the property side of reinsurance is one trend that NewRe is watching closely, especially secondary perils driven by climate change-propelled events such as flood and hail.

This was the view of Dirk Herrenpoth, chief underwriting officer at NewRe, as he spoke to Monte Carlo Today.

Herrenpoth said that the casualty side of the business was still grappling with the aftermath of the COVID-19 pandemic, and as a result there were still questions around what the new normal will look like for many lines of business. He said that NewRe and its clients were observing these areas of uncertainty closely.

On the topics to be most talked-about at Monte Carlo this year, he said that inflation shows no sign of dropping down the agenda, particularly with the outlook for some big countries such as the UK, suggesting inflation could surge into double digits.

Available capacity, or the lack of it, was another major topic flagged by NewRe’s CUO.

“Some markets, especially in the property-cat arena, have decided to close their books, or at least reduce their books and take a more cautious view on their exposures.”

He added: “We still see a continued tightening of the market dependent on the class of business but against the backdrop of the withdrawal of certain capacity. I would be surprised if that trend was over in 12 months because there are so many drivers. These include inflation, and the war in Ukraine. All these things will drive the current market environment to be there for longer.”

Herrenpoth said that property-cat business has not performed well in recent years “so there is a need for correction”. This is on top of the many uncertainties around inflation and climate change driven perils, he added.

NewRe itself is not subject to any capacity constraints, he said, because the reinsurer is sitting on a healthy, performing portfolio.

“We see the opportunity to increase capacity to a certain degree when it comes to wind or earthquake exposures, but terms and conditions must be right. We are not aggressively targeting growth in our book of business, but I’m prepared to seize opportunities when terms and conditions are right.”

The reinsurer will take a “more cautious approach” when it comes to frequency covers, especially against the risk of inflation, he said.

“Those covers are particularly exposed. As such, there’s very little room from our side for new business. We’re not ruling it out completely, but we take a modest approach to all casualty lines, be it motor or be it liability,” he concluded.