Market conditions point to portfolio optimisation: Convex’s Middleton
Hardening market conditions present an opportunity for Convex to “refine” its portfolio through reinsurance buying and through the way it underwrites to push for growth in attractive lines of business, according to Anne Middleton, head of ceded reinsurance and capital modelling at Convex.
In a video interview with The ReInsurer, Middleton highlighted “nuances” within current operating conditions which are influencing how the London-Bermuda specialty carrier thinks about portfolio optimisation.
“That’s all about acing how we gather data from far and wide and underwriter insights to think carefully and deliberately about how we optimise our portfolio across lines and segments of business.”
In particular, Middleton added that reinsurance buying will be a critical part of how the carrier optimises its portfolio going forward but noted the importance of making data-led decisions that are best suited for clients.
“We’re not looking for huge swings in behaviour, far from it,” she explained. “We want to provide reliable and stable positions to our investors, our clients and our counterparties. This is all about refinement of the portfolio.
“We can make forms of refinement through our reinsurance buying and through the ways that we underwrite but we like it to be data-led and backed by insights from our underwriters.”
While it’s too early to say what retro conditions will be like with the Atlantic Hurricane season in full swing, Middleton highlighted that Convex’s approach to reinsurance buying, particularly cat capacity, is to have a “broad pipeline” of different forms of capacity available.
“There’s a whole range of forms of capital that you can use to support your balance sheet and by having a range of tools to do that means that we can move quite gently and stably between them as the market evolves,” she added.
Middleton pointed to the specialty carrier’s debut cat bond – Hypetia – as a transaction which allows Convex to access multiple sources of capital which also sets aside a portion of capacity for 2021 and beyond.
Looking towards the important 1 January renewals, Middleton expressed confidence that deals would be done by the end of the year despite the turmoil thrown up by the Covid-19 pandemic and its impact on the market’s ability to trade face-to-face.
“It’s a bold new world that we’re working in at the moment,” she said. “We’re all in it together and are trying to find the best way possible. It also helps that we all have a vested interest in getting the deals done by the end of the year. It helps bring us all to the table in a constructive way.”
While conversations between reinsurers and brokers remain at the forefront, Middleton expressed concern that some communication between team members and the day-to-day interaction with colleagues may be being missed.
“What can fall by the wayside is some of the team communication,” Middleton added. “That deserves a bit more attention.”
“I have every confidence that we will get through this and find benefits that outweigh some of the challenges associated with this new way of working. What all this virtual working has proven is that it does work but I do miss the face-to-face conversations.”