Launched in May, the new unit will enhance PartnerRe’s ability to deploy cat capacity, Haft said, noting that the move sees the carrier return to its roots with an ambition to take advantage of changing market dynamics.
“PartnerRe began as a cat company, but we’ve been pretty quiet in terms of cat appetite over the last few years,” Haft explained in a video interview with The ReInsurer.
“The formation of the global cat unit speaks to our intention to be a leader in the cat space with capacity to deploy if the market is rational.
He added: “We certainly intend to deploy more capacity where we see opportunities in the market and it’s my expectation that we will be deploying more in the future but only if the market moves as we believe it will in 2021.”
Haft said the formation of the unit allows the carrier to take “a holistic view” of cat risk across the group and ensures that it can optimize its cat portfolio on an aggregate basis.
While PartnerRe expects pricing to move “meaningfully” across its cat portfolio, Haft highlighted that every client is different and that geographies have differing loss histories which makes a one-size-fits-all approach to market movements difficult.
“The fact remains that cat returns have been subpar on a price basis for the better part of the last decade and on an actual basis, given the loss experience, the last several years,” he explained. “It is our view that more rate is needed to ensure the long term sustainability of the market.”
The current market conditions, combined with PartnerRe’s balance sheet strength and technical abilities, places the carrier in “pole position” for growth, he said.
A fear of volatility continues to be the driver of reinsurance buying, Haft added. But the industry needs to enhance its modelling capabilities.
“The main vendor models do a very good job at evaluating US hurricane risk, which tends to be the peak risk, and performs a reasonable job on a number of the peak perils,” he said.
“Beyond those peak perils the vendors are doing their best but the uncertainty is enormous,” he said. “My view of the credibility of some of those outputs is pretty low.”
Haft pointed to PartnerRe’s in-house cat model – Cat Focus – which allows the carrier to price using its own model and share the data with its client base.