Kessler: no future for tier 3 reinsurers
The industry is increasingly becoming split into different tiers of reinsurers – but there is little hope for those that find themselves in the lowest tiers, according to Denis Kessler, chairman and CEO of SCOR.
Kessler was speaking at the Standard & Poor's Ratings Services' 30th Annual Insurance Conference this week.
He argued that significant changes in the industry are creating a tiering of companies. The battle for firms now, is to ensure they are in at least Tier 2, he argued.
“Tiering of the industry is the key word in 2014 and 2015,” Kessler said. “It’s not just a question of size, it's the quality of underwriting and the choice of business lines where you could prove to your clients that you're competitive.”
Tier 1 companies, he explained, essentially can meet clients' demands both qualitatively and quantitatively. He said that tier 3 companies, however, "should buy a t-shirt that says 'no future'" because he believes they don't have what it takes to last in this environment.
Amid this tiering is an air of consolidation. A conference survey of delegates revealed that 51 percent of attendees believe there'll be active M&A in the next year, with as many as five major transactions.