Reinsurance in Europe – the 2023 view
TransRe’s new president of EMEA, Julien Mollinier, joins European chief business development officer Rüdiger Skaletz to discuss the state of reinsurance in the region.
What are the key messages that TransRe is delivering to its clients this year?
Rüdiger Skaletz (RS): We always say we are a reinsurance company, and we focus exclusively on the needs of our clients. Last renewal season, we were focused on adequate pricing, and today we are still focused on that. We are ready to deploy capacity at the right price. It is just a question of the right price.
Julien Mollinier (JM): Cycle management is another area of focus for us because we think it has not been well done in the past by the market. Cycle management is necessary because the response from the market in Europe has been sporadic, so it is vital we remain disciplined. There are also some areas where terms and structures have improved substantially, but there are others where it has remained challenging. Therefore, it is important to be selective and disciplined.
What are the major reinsurance trends you are seeing in Europe?
JM: Uncertainty remains. We need to see better prices and structures – this is important across all lines of business. Secondary perils remain topical for the industry. There have been significant losses in Europe as a result of this. Markets are adjusting, but slowly and sporadically. There will be an increase in catastrophe capacity but it must be at the right price. We will not be deploying capacity at any price, as it is important we get decent risk-adjusted increases.
RS: We still have Covid-19 losses in the background, adding to the catastrophe losses because most pandemic claims were made against cat programs, but were never priced in.
What factors are driving the property market?
RS: The market still has some way to go to get to sustainable levels. Rates have stayed too low for too long. In the current environment it is clear these prices must go up, or capacity will leave the market. New capacity is coming in but not much, and not enough to meet increased demand caused by inflation and recalculations around secondary perils.
What factors are driving the casualty market?
JM: Casualty prices must also adjust here, given social inflation among other factors. We expect significant adjustments going forward, including increases in casualty loss trends. There has been increased appetite for casualty and specialty business, and casualty attracted some capacity because people wanted to manage volatility on the catastrophe side. That is no longer the situation.
What makes TransRe special?
JM: It has been an exciting time at TransRe and we get a lot of questions about the Berkshire Hathaway deal. This was great publicity for the business, but it has been pretty much business as usual. There has been no reason to change anything. I joined the company a few weeks ago but I have been impressed by the culture here. We have great underwriting talent, multiple underwriting platforms (Munich, Paris and Zurich) close to our core trading partners, and superior financial security – all the ingredients needed to be a reinsurer of choice in continental Europe.
RS: TransRe started business in 1977 as a casualty company and you can see that casualty DNA running through the business ever since then. We are extremely well positioned in the current market environment. We have an AA+ rating, strong balance sheet and can take advantage of market opportunities that may appear going forward.