Global, bespoke solutions suit Liberty Mutual
Traditional reinsurers have upped their game in the past 12 months in terms of their offering to the largest cedants and their willingness to offer more bespoke products.
That is the opinion of James Slaughter, senior vice president and director of global reinsurance strategy at Liberty Mutual Insurance, who said the influx of alternative capacity into the market has made traditional players focus on establishing deep relationships with cedants—something that suits Liberty.
“The traditional market has been, perhaps, the most innovative part of the market in the last 12 months,” said Slaughter.
“Global buyers require capacity across broad geographic regions and lines of business, many of which are not supported by the ‘non-traditional’ markets. This relationship approach, in particular, helps to differentiate the traditional reinsurers, allowing them to provide bespoke products for clients like Liberty.”
Slaughter also believes that the dynamics in the market mean that consolidation is very much on the agenda for many players and he anticipates that this will be a big talking point at the Monte Carlo Rendez-Vous this week.
“We suspect that the continued prospect of consolidation among reinsurers and intermediaries will remain foremost on the agendas of attendees,” he noted.
Against a backdrop of change for reinsurers, however, he said Liberty has not changed its own approach to risk transfer in the past year. It is focused on maintaining long-term relationships with traditional players while leveraging alternative risk transfer mechanisms such as insurance-linked securities (ILS) as appropriate.
“Liberty’s approach to reinsurance buying has not changed in the last 12 months. Liberty has reviewed its purchasing approach and its interaction with the wider reinsurance market over the last five years and remains a consistent and long-term buyer,” Slaughter said.
“Liberty’s approach aims to develop long-term and sustainable protections and relationships. Price is one just element of the marketplace—Liberty assesses cost and efficiency across a range of capital and reinsurance sources to ensure that risk is ceded at an appropriate cost.”
In relation to its ILS programme, Liberty’s third cat bond transaction Mystic Re III expires in quarter one 2015. Slaughter is non-committal about what form this might take in the future, if any.
“As with all sources of reinsurance protection, Liberty will continue to assess appropriateness for achieving risk and cost targets,” he said.
