Soft markets demand differentiation beyond price, says VIG Re’s Mathe

As the market softens, reinsurers cannot rely on price alone to stand out. VIG Re executive explains why long-term strategy, not short-term market movements, should shape growth.

Key points:
A broader view of growth
Driven by strategy, not cycles
Long-term partnerships are key

As reinsurers prepare for another Monte Carlo Rendez-Vous dominated by discussions around pricing, Joachim Mathe believes the industry risks becoming too focused on the market cycle itself.

Softening conditions are undoubtedly reshaping competition, but for the head of Special Markets Unit at VIG Re, the bigger question is not how far prices will fall, but how reinsurers choose to compete when markets become more competitive.

“Everyone is speaking about the cycle and, of course, the weakening environment,” Mathe told Monte Carlo Today. “Nevertheless, it’s not only the price which is making a strategy.”

“We would not compete on a pure open-market placement where price is the one and only differentiator.”

Instead, he argues that every reinsurer enters the market from a fundamentally different position. Capital structures, ownership models, portfolios and long-term priorities all influence how firms respond to changing market conditions.

“There is not one size fits all,” he says. “Everyone has different strategic priorities and different starting points.”

For Mathe, that means the next phase of the market will reward reinsurers that understand where they can genuinely differentiate themselves, rather than simply deploying more capacity into an increasingly competitive environment.

Looking beyond price

One of the biggest mistakes a reinsurer can make during a softening cycle, he argues, is treating every opportunity as a pricing exercise.

“We would not compete on a pure open-market placement where price is the one and only differentiator,” he said. “Otherwise, it’s simply deploying undifferentiated capacity  into a weakening environment. That’s not our story.”

Instead, he believes sustainable growth comes from understanding the broader client relationship and identifying where a reinsurer can provide value beyond capacity alone.

“We look very holistically into a business case,” Mathe explained. “It’s about strategic business development.”

That also means recognising that not every opportunity deserves to be pursued. “If the relationship doesn’t justify it and we don’t believe we can earn the technical margin required over the cycle, then we would rather abstain.”

Building a less cyclical business

That philosophy sits at the heart of the company’s VIGRe28 strategy, which aims to reduce dependence on market cycles by broadening the business and deploying capital more selectively.

“We are a growing company,” Mathe says. “But growth is not a target or an objective in itself.”

Instead, the focus is on supporting clients across a wider set of needs, deepening relationships and creating lasting partnerships

The reinsurer’s Special Markets platform brings together international nat cat, facultative re, life re and special risk solutions – each serving a different strategic purpose but collectively helping diversify earnings, optimise capital and deepen client relationships.

International nat cat, for example, is intended to diversify VIG Re’s predominantly European portfolio rather than simply add catastrophe capacity.

“We’re not just another catastrophe player,” Mathe says. “It’s about client partnerships, diversification and capital management.”

Meanwhile, life reinsurance provides a less cyclical source of earnings, while facultative and structured solutions allow VIG Re to support clients with more tailored transactions that extend beyond traditional treaty placements.

Mathe believes this type of bespoke work becomes increasingly valuable as markets soften.

Where standard reinsurance products dominated during the hard market, clients are increasingly looking for partners that can help solve broader business challenges, whether through structured transactions, capital optimisation or earnings protection.

He also sees client priorities evolving as secondary perils account for a growing share of catastrophe losses and insurers retain more risk.

As a result, conversations increasingly extend beyond reinsurance buyers to chief executives and chief financial officers focused on protecting earnings, reducing volatility and improving capital efficiency.

“What they want to see is protection of their capital base and their balance sheet,” he said.

Credibility over cycles

“You cannot plan for credibility. It has to be built over time.”

The same long-term thinking underpins VIG Re's expansion into Asia. Rather than viewing Singapore as a tactical response to market conditions, Mathe describes the new representative office as a strategic investment designed to strengthen relationships and demonstrate a lasting commitment to clients in the region.

“It’s about being close to our clients. Showing commitment to the market,” he said.

Ultimately, however, he believes the industry’s greatest differentiator cannot be measured by pricing at all. Clients increasingly approach reinsurers with specific challenges because they trust them to provide solutions, not simply capacity – a credibility that can only be earned over time.

“You cannot plan for credibility,” Mathe says. “It has to be built over time.”

At Monte Carlo this year, he hopes the industry’s conversations evolve beyond whether prices move up or down.

“My wish is that we differentiate ourselves through our propositions and how we serve clients, rather than only discussing whether prices are going up or down,” he concluded. “Everyone has different strategic priorities. That’s where the real conversation should be.”

Joachim Mathe is the head of the Special Markets Unit at VIG Re. He can be contacted at: j.mathe@vig-re.com

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