Carriers must brace for $300bn loss year: why resilience is key for Convex CEO Brand

Like many chief executives of large, multinational re/insurers, Paul Brand, CEO of Convex, will wear several hats in Monte Carlo this week. He will meet with brokers, retail and wholesale, and some inwards reinsurance clients. But perhaps the most important one he will don is that of a reinsurance buyer.

Key points:
Carriers must plan for historic loss
Convex outlines Lloyd’s plans
Brand explains ‘insurance paradox’

That is because of the importance of reinsurers to Convex’s business model. The carrier has a high cession rate compared with most of its peers, meaning those relationships are critical. But it is even more important given Brand’s very personal philosophy of planning for the long term – and for the “really big one”.

“A $200 billion loss year is an absolute certainty, and quite soon.”

“We buy a lot of reinsurance, working with a core panel of around a dozen top reinsurers,” he told Monte Carlo Today. “We have a high cession level and that’s conscious. We like the stability those long-term partnerships with high-quality reinsurers offers. But I also believe in planning for the long term; in doing business you understand well and commit to long term. And to do that, you need to be resilient through even the biggest losses.”

And Brand means big. He notes that global industry losses reached $150 billion last year, a level that could easily be exceeded in 2025. He believes a $200 billion loss year is inevitable soon. But he also predicts a $300 billion or even greater loss will happen. And that is when having the stability of well-capitalised, long-term partners becomes invaluable.

“A $200 billion loss year is an absolute certainty, and quite soon. I’m more interested in really big loss years where it feels like the wheels could fall off the market altogether. Imagine the losses of 2001 [9/11] and 2005 [hurricanes Emily, Katrina, Rita and Wilma] combined. What would happen then? The bottom line is whether your reinsurance partners want to renew with you when things are really tough. Will you have access to their capital at that point in time?”

Closing the goodwill gap

He makes the point that cedants who might have previously shopped around for reinsurance or chopped and changed business lines, may find goodwill lacking in such critical times. “At that point, they’ll be at the bottom of the list of clients who reinsurers want to do business with. They will be picky and selective. But I want to be high up that list because that’s how I provide continuity and capacity to our clients.”

Conversely, this philosophy of being selective is also true in reverse. All its reinsurance arrangements are long term, and most partners write large lines across its entire book. “We spend a lot of money on reinsurance; we think we are a good client, so we are picky on who we work with. If we have previously seen any bad behaviours, perhaps claims not being dealt with properly, we won’t work with that carrier.”

And in the spirit of the importance of long-term relationships, he also understands how the businesses’ fortunes are entwined. “We expect our reinsurers to have more volatility than we do. That’s why we buy reinsurance. But we expect them to make money over time for taking that volatility. Our reinsurers’ loss ratio might often be better than ours. But in that $300 billion loss year, that’s going to be different. And then they’ve got to be both able and willing to pay a claim.”

Rate focus can be distraction

Also, like most Monte Carlo attendees, Brand takes a considered approach regarding rates; property cat is broadly softening; some casualty lines are still hardening. But he also regards rates as a distraction from what it takes to run a successful carrier for the long term. “Everyone gets very focused on prices. But if you’re really taking a longer view, you shouldn’t be surprised when market conditions change; you should be able to trade through the cycle and have the expertise to adjust appropriately as events unfold. That is what clients really want.”

Part of Brand’s resilience planning might also be seen in his move to take Convex into Lloyd’s this year. In February, it received approval to launch Lloyd’s Syndicate 1984, which commenced underwriting in April 2025. It made the move working closely with Gallagher Re and Asta, which was appointed as the managing agent.

It has set an initial target to underwrite £150m of gross written premium in 2025. It will underwrite some reinsurance of Convex and selected lines of international business including accident and health, casualty, crisis management, ELA (equine, livestock and aquaculture), energy, marine, political risk and property.

Brand describes the Lloyd’s operation as complementing its underwriting units in Bermuda and London. Given the background of the company’s founders, he said it has always been on the agenda – but now was the right time.

“We see that Lloyd’s can offer additional distribution through its slightly broader licence set. That is something some clients will appreciate. There are also some of the benefits around the stability the capital offered by Lloyd’s Names gives. We also see how Lloyd’s is modernising itself and making itself more flexible.

Lloyd’s leadership lauded

“At heart, I'm an incrementalist. I like to do things in small steps and stick to what we have expertise in. But I liked how we could go into Lloyd’s with a relatively simple plan and offer something likely to be good for clients long term. It just felt like a very nice arrangement. Also, hats off to the Lloyd’s leadership for things like London Bridge 2. The flexibility of capital that allows is a very attractive idea. When you add that to the use of Names capital, with the different options for placing risk, it becomes an attractive proposition.”

Brand is clearly thinking long term – as carriers should. The company has also performed well recently. It made a $506 million net profit in 2024, a small increase on 2023; its gross written premiums increased by 22% to reach $5.2 billion.

Many of its peers have also enjoyed solid results in the past two years. Yet he believes investors are less convinced of carriers’ ability to maintain these levels. He has called this the “insurance paradox” – record profitability for many companies, yet this is not reflected in share prices or start-ups.

“I think investors are still cautious when it comes to investing in carriers,” he says. “We’re quite a long way down the list of priorities. There’s still a lot more interest in distribution: in brokers, MGAs, which are going for historically high valuations. Everyone knows this world cannot work without a balance sheet at the end of it, yet questions remain over the ability for balance sheet-based business models to really earn the sort of returns that are attractive to capital long term. That problem doesn’t appear to have been solved yet.”

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