Argo reinsurance buying strategy shift “only natural” as company evolves
It is “only natural” that Argo’s reinsurance buying philosophy will change as the company refocuses its operations, according to the company’s group head of ceded reinsurance Katie Partington Howarth.
Kevin Rehnberg, who was appointed Argo CEO on a permanent basis in February, told analysts back in August that the company was reviewing businesses that generate more than $500mn of combined premium for potential sales, re-underwriting or closure.
And Partington Howarth told The ReInsurer that moves to grow or expand in certain areas will understandably have an impact on its reinsurance buying.
“It’s only natural that as we look where we decide we’re going to enhance our footprint, or reduce our footprint, that our buying strategy will have to adjust,” she said.
“There has definitely been a theme at Argo to simplify, and we’ve definitely done this in our international [reinsurance] buying in the last year,” Partington Howarth added.
As the executive explained, almost every line of business is seeing momentum on rate. Argo’s reinsurance buying strategy, Partington Howarth explained, “is very closely linked with our underwriting strategy”.
“We’re looking at lines of business, the rate environment, and what that means for overall profitability and long-term profitability,” she said.
“We decide where we want to focus, and then what the downside looks like. And that’s where reinsurance comes in.”
Partington Howarth said consistency and transparency with Argo’s reinsurance partners “has been a huge focus for us this year”, and that same approach will remain in place heading into the 2021 reinsurance renewals.
The company has been frequently connecting with its reinsurance partners throughout the pandemic even though face-to-face meetings have not been possible.
Part of the motivation for that drive to stay connected is to maintain close relationships.
Partington Howarth said there is “a fear” that being a buyer at a time when rates are on the rise and it is impossible to have direct interactions, reinsurance underwriters “could become more cut and dry” in their negotiations.
“Our relationships could become less important,” Partington Howarth said. “We want our partners to feel connected to us. We want them to know what we’re doing [and] how we’re handling challenges,” she added.
“We’re putting a lot of effort into being transparent, and showing where we’ve reduced limits and coverage. I really hope that reinsurers are going to recognise that and apply a thoughtful approach to coverage instead of just a broad brush one,” she said.