14 September 2014 Insurance

Ecclesiastical backs traditional model

The influx of so-called alternative capital into the reinsurance market in recent years has benefited all cedants, even those that do not utilise this form of capital directly, believes Mark O’Riordan, head of group reinsurance at Ecclesiastical Insurance, the UK insurer that specialises in offering home, church, heritage and charity coverage.

“There’s no doubt that alternative capital will continue to benefit ceding companies either directly or indirectly through its impact on the traditional market, particularly as more traditional reinsurers look to provide alternative capital solutions and widen the range of products available to insurers with whom they already have relationships,” O’Riordan said.

While Ecclesiastical has not used this form of capital so far, its buyer does not rule out this option. But, he said, its need for long-term relationships and stability means that it has stuck with the traditional model for now.

“For us, due to the nature of our portfolio and the need for long-term sustainable reinsurance, the traditional market still suits our needs best at the current time. We do, however, follow developments regarding the use of alternative capital so it’s not to say that in the future we won’t consider alternatives should these prove to be beneficial,” O’Riordan said.

He added that with market conditions so favourable to cedants, Ecclesiastical has made adjustments to its programme where appropriate. In some instances, it has utilised market savings to support further reinsurance purchase; in others, it has chosen to retain the benefit.

“But overall the favourable conditions have not really influenced our buying philosophy or affected our risk appetite,” he said.

“We continually review both the overall reinsurance structure and individual programmes in order to optimise our purchase so the challenge has been to balance our need for sustainable reinsurance with long-term partners with the opportunities that exist for reinsurance buyers in the current market.

“Reinsurance is fundamental to our business strategy here at Ecclesiastical so long-term sustainable reinsurance with carefully chosen long term partners remains at the heart of what we look to achieve.”

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