Navigating climate chaos with operational agility: examining Arundo Re’s blueprint for success

Laurent Montador (pictured), deputy chief executive officer of Arundo Re, explains to Intelligent Insurer the drivers behind the company’s standout performance.

The reinsurance industry is no stranger to disruption: from escalating climate risks and inflation-driven claims to shifting market dynamics, reinsurers face a gauntlet of challenges. 

Yet, amid this turbulence, Arundo Re has carved out a reputation for resilience and innovation. A remarkable 15% turnover growth in 2024 and a combined ratio of 94.7%, means the company has emerged as a stand-out performer. 

According to Laurent Montador, its deputy chief executive officer, success stems from a delicate juggling act of agility, innovation and operational discipline. “It’s about balancing risks, optimising returns and staying ahead of challenges,” he explained.

For Arundo Re, resilience begins with a solid foundation. “An insurance company needs strong capital, which we have thanks to our shareholders, SMABTP and MACSF, both with excellent ratings,” Montador said. 

But capital alone isn’t enough, and the company’s true strength lies in its people. “Our staff are crucial. We emphasise staff retention and training, ensuring their development aligns with our goals,” he said.

This focus on internal strength is complemented by a client-centric approach. “For years, we’ve delivered double-digit growth,” Montador noted. “The key lies in being client-focused, understanding their needs, capital adequacy and market dynamics.”

This synergy between operational robustness and client alignment is further bolstered by advanced tools that balance portfolios and optimise returns. 

“We leverage what we call ‘three dimensions’ – turnover, bottom line and capital consumption – allowing us to adjust price adequacy and profitability during renewals,” Montador said.

Climate change presents a profound challenge for the reinsurance industry, but Arundo Re has embraced a science-driven approach to mitigate its impact. 

Montador highlighted its methodology: “We reassess climate change factors in our pricing, using scenarios like RCP8.5 from the IPCC. (Intergovernmental Panel on Climate Change).

“We work closely with vendors who integrate climate change effects into their models, helping us refine the probabilities of future events.”

“By factoring in future probabilities, we’re positioning ourselves and our clients for long-term success.”

The company’s advanced exposure management tool plays a critical role in this strategy. “This enables daily monitoring of cat exposure. It’s not real-time but operates daily during renewals, helping us balance the portfolio and maintain profitability,” Montador explained. 

This integration of climate science and technology ensures Arundo Re remains ahead of the curve in managing evolving risks.

A science-driven focus also allows the company to be proactive rather than reactive, as Montador observed: “We’re not just responding to climate challenges; we’re anticipating them. 

“By factoring in future probabilities, we’re positioning ourselves and our clients for long-term success,” he noted.

Agility through efficiency

Arundo Re’s operational efficiency is another cornerstone of its resilience. 

With a cost ratio below industry peers, the company leverages automation and artificial intelligence to maintain a lean, yet effective, structure. 

“Our cost ratio is below our peers, partly because we’re a medium-sized company with just over 200 employees,” Montador stated. “We invest in automating processes and incorporating AI to save time during renewals and ensure efficiency in claim settlements. 

“We want to provide exceptional service while keeping operations streamlined.”

The company’s decision-making chain further enhances agility. “A short hierarchy allows us to respond quickly to our clients’ needs, making us more agile in a competitive market,” Montador observed. 

This responsiveness has become a defining feature of Arundo Re’s client relationships.

Montador also highlighted the importance of balancing growth with efficiency. “Being lean doesn’t mean cutting corners but being smart with resources and ensuring every decision adds value for our clients and stakeholders,” he explained.

As the reinsurance market shows signs of softening, Arundo Re remains proactive, and Montador acknowledged the shifting dynamics: “While this isn’t a soft market yet, it’s clear programmes are over-placed, and rates are beginning to decrease after two years of increases.”

Despite these pressures, the company is well positioned for growth, supported by a solvency ratio of 211% and innovative risk-transfer mechanisms.

“Our ILS vehicle, 157 Re, provides additional capacity on the cat side, enabling us to optimise risk and growth,” Montador explained. 

Stress-tested portfolios and equity overlays also ensure stability against market fluctuations. “Our equity is protected by an overlay, capping potential drawdowns,” he added.

Looking ahead, Montador identified the challenges of external pressures such as economic uncertainty. “Growing protectionism in some countries could impact the reinsurance industry, which thrives on the freedom of trade and collaboration,” he warned. 

However, Arundo Re’s preparation and adaptability provide a buffer against these risks. “It’s not just about weathering the storm; it’s about thriving in it. 

“We’re here to set a standard for what resilience looks like in reinsurance,” he concluded.

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