Capital markets technology can benefit reinsurers

Capital markets technology can boost reinsurers’ profitability and help them gain a better understanding of their portfolios through the efficient gathering and use of big data, Adrian Bentley, chief executive of Analyze Re, told Monte Carlo Today.

He said using data in this way has not traditionally been a priority for reinsurers but this was starting to change.

“Reinsurers haven’t traditionally needed to make instant decisions,” he said, “but what becomes interesting when you process data quickly is that you can start to question your portfolio. Questions might be around improving returns or de-risking, but without some kind of platform, those questions are pretty hard to ask.

“The senior levels have been underserved by the systems that supported them in the past, and the approach has ended up being retrospective—essentially a rear-view mirror situation based on what has already happened.

“Our technology provides a proactive rather than reactive approach. We’re bringing capital markets technology into the reinsurance industry.”

Bentley said Analyze Re’s technology focuses heavily on informing underwriting decisions in the property-catastrophe market, as that’s where the greatest demand is.

“We, as an industry could do a better job of managing our portfolios, which is exactly what our technology does. It helps companies to increase efficiency on their portfolio by mining the data that they’re retaining, which should then result in profitability,” he said.

Bentley said that increasing efficiency by using analytics and technology should be a key strategy for companies wanting to stay ahead of the competition.

“For those forward-thinking companies that are looking to innovate, this is really important.

We primarily work with larger companies, but we have also worked with smaller companies and sidecars,” he said.

Bentley also said that, in the context of industry conditions favouring for mergers and acquisitions (M&A) activity, better analytics can help companies considering a deal.

“If you look at the XL-Catlin merger the companies were both very analytical and they merged well, but if you look at the proposed AXIS and PartnerRe deal, it would have been hard to say which one is more advanced,” he said.

“Inevitably all companies we talk to want to increase efficiency, and I think that M&A generates new innovation and efficiency.”