Hardships faced by many put industry’s problems into perspective

A rapidly changing risk landscape will mean many new risks for reinsurers to grapple with and overcome but these will also yield many opportunities for the industry, Bob Forness, chairman and chief executive officer of MultiStrat Holdings, told Monte Carlo Today.

He added that as the industry ponders how it will react to hurricane losses in the US and the Caribbean, executives should not forget the reality of the hardships faced by those directly affected by the storms.

“This week, the risk landscape is defined by an onslaught of hurricanes. Will this move the market? Or will excess capital from existing reinsurers and investors ‘sitting on the sidelines’ fill in even the largest gaps? As we consider the hardships faced by so many people, our ‘realities’ seem more manageable,” Forness said.

The industry is facing challenging market conditions but it must not forget the basics of the business, he said.

“We’ve come to accept certain realities such as low investment yields, consolidation, and excess reinsurance capacity as persistent headwinds in our pursuit of opportunities.

“As we overlay new and evolving risks including cyber crime, climate extremes, population displacements, nanotechnology, genetically altered crops, artificial intelligence, legal trends, medical advances, adversarial political forces, war, civil unrest, and automation, the changing risk landscape becomes complex,” Forness said.

“As a reinsurer, we want to answer two questions. First, what losses will develop for our existing clients? Second, what new clients or exposures are available to reinsure?”

MultiStrat Holdings identifies opportunities by focusing on its institutional investors, he said. “What business can we develop that matches their risk appetite and other criteria?”

The launch of the company’s first ‘casualty-linked security’ and the potential to expand this structure to reinsure a broader array of new and developing risks is the biggest opportunity, he concluded.

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