Renewals will test who can ‘walk the talk’: VIG Re CEO

Ahead of the January renewals, reinsurers must prove that promises of partnership and discipline survive the cycle, says VIG Re CEO Tobias Sonndorfer.

Key points:
Growth cannot dilute risk discipline
Choosing the right opportunities will be key
‘After renewal is before renewal’

Reinsurers may face a more demanding test of their discipline at the January renewals, as strong industry results and abundant capacity put pricing discussions back in sharper focus. But for VIG Re chief executive Tobias Sonndorfer, the main question is how reinsurers will behave if competitive pressure intensifies. 

“In order to succeed, you need to walk the talk,” he told Monte Carlo Today ahead of the 68th Rendez-Vous de Septembre. “Continuity is important for us.” 

The mid-year renewals pointed to greater competition, particularly in property cat. Such themes are likely to remain important heading into 1/1. Sonndorfer cautioned against assuming that the course of the market is already settled, as supply and demand seek a new equilibrium, though a reversal of the current dynamics would probably require a combination of events rather than one shock in isolation. 

Profits meet a harder risk reality 

Reinsurers are reporting strong results just as the risks around their clients become harder to read. Sonndorfer described “a very resilient and profitable reinsurance market”, helped by benign loss activity, but set it against an “elevated risk landscape” shaped by geopolitics, financial markets, energy, inflation and AI. 

The greater challenge, he argued, is not assessing the portfolio itself, but understanding the environment in which it is being underwritten. 

“The industry has the means and capabilities to assess a portfolio,” he said. “What is becoming increasingly difficult is understanding the environment in which that portfolio is produced, and the risks and drivers surrounding it.” 

That uncertainty makes underwriting discipline more important. 

“In order to succeed, you need to walk the talk. Continuity is important for us.” 

Promises under pressure 

VIG Re enters the 1/1 renewal having written nearly €1 billion [€995.6 million] in gross premium and a net combined ratio of 85.7% last year, pursuing VIGRe28, a three-year strategy built around strengthening, expanding and accelerating the business. 

The strategy includes deeper relationships in continental Europe, a broader role on client programmes, expansion in Asia, and investment in data, technology and talent, and the continued development of its tailored client solutions, including VIG Re’s Special Markets Unit. But Sonndorfer stressed that its pace must remain responsive to the market. 

“We do not compromise our underwriting discipline or our underwriting view through that strategy,” he said. “It is about finding the right balance between being close to clients and delivering on our promise to be a partner, while maintaining a clear view of risk.” 

Competition will make that balance harder to maintain. Sonndorfer nevertheless sees room to grow, and adds that opportunities “require being close to clients and more communication. The challenge is not finding opportunities but choosing the right ones.” 

For him, growth therefore cannot come at the expense of what VIG Re is known for. “We do not want to compromise our view of risk,” he said. “That is at the core of VIG Re and should remain so, regardless of its size.” 

A measured expansion 

The reinsurer’s plans in Asia reflects that approach. VIG Re received regulatory approval in June for a representative office in Singapore, extending an Asian presence that already includes business in Japan, South Korea and Taiwan. 

When talking about expanding to other markets with potential in the region, Sonndorfer made it clear that the immediate objective is to establish VIG Re’s reputation and explain how it wants to work before pursuing volume. 

“In three years’ time, we want to have built a pan-Asian portfolio, but we do not have a specific number we want to hit,” he said. “Business production and growth should be the result of our activities, not the goal per se.” 

For Sonndorfer, the reinsurers that stand apart in this market will be those that understand the value of their product, maintain year-round client relationships and can execute consistently across the organisation. 

“After renewal is before renewal,” he said, underscoring that delivery and client relationships cannot be confined to a single negotiation or renewal date. 

You can talk a lot and write nice things on slides, but at the end of the day, you need to deliver the product to the client,” he added, emphasizing the importance of reliability. 

Sonndorfer stated that VIG Re would remain engaged with clients as conditions changed and work with them towards “a meaningful product, a meaningful solution”. 

Prices will inevitably dominate much of the discussion in Monte Carlo. Sonndorfer’s broader point, however, is that success in a softer market will be determined by how reinsurers respond to greater pressure and find workable solutions for clients without allowing competition to dictate their view of risk. 

Tobias Sonndorfer is the chairman and chief executive officer of VIG Re. He can be reached at info@vig-re.com

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