Liberty Mutual sees more value in traditional reinsurance

It is likely to be a relatively uneventful renewals season this year for seasoned reinsurance buyers who stick by tried and tested strategies and are not interested in opportunistic buying in soft market conditions.

That is the view of James Slaughter, senior vice president and director of global reinsurance strategy at Liberty Mutual. “I don’t think buying behaviour will change much at January 1. In the main I think it will be a fairly straightforward renewal season for those with mature and sophisticated buying strategies,” he said.

Liberty Mutual has traditionally used a wide variety of risk transfer tools including insurance-linked securities (ILS) and other forms of collateralised reinsurance to complement its arrangements with traditional reinsurers.

But Liberty Mutual has started edging back towards traditional coverage. It has completed three cat bonds previously but decided not to renew Mystic Re this year after finding better value in traditional reinsurance.

Slaughter told Monte Carlo Today this would be unlikely to change as the ILS market currently stands. “We continue to find better value in the traditional marketplace,” he said.

He added that Liberty does not forecast any major upheavals at the January 1 renewals and that its strategy will be determined by pre-set risk tolerance metrics.

“We don’t use price as the determinant of purchasing. We have very clear risk tolerance metrics and they cascade through the organisation informing us of the reinsurance need,” he said.

When asked if he agrees that it is a buyer’s market at the moment, he said it depends on the perspective of the buyer.

“On the face of it this is a buyer’s market but transactions only conclude if all parties are accepting of the terms. We buy based on the need and availability of protection to match our corporate goals,” he said.