Beazley expects robust negotiations on price and terms

Reflecting a sentiment of many other reinsurance buyers, William Mills, group head of ceded reinsurance at Beazley Group, is seeking to improve the terms, conditions and pricing across all classes of business, he told Baden-Baden Today.

He said that while the company intends to remain loyal to its long-term reinsurance partners, it is also benefiting from the intense competition between reinsurers on most classes of business.

“Reinsurers are almost universally broadening their appetite for additional classes of business, particularly those reinsurers with a more pronounced focus on US cat, so we continue to see a competitive quoting environment and over-placement of firm order terms,” Mills said.

“Beazley intends to continue to trade with long-term supporters of our products, but the presence of plentiful new capacity is putting incumbent markets under pressure and we are seeing the benefits of this dynamic.”

He said one of the few exceptions to this rule is on US catastrophe business, where he expects the rate of decline to slow in 2016.

The company will not be making any radical changes to its programme but it is incorporating more multi-year and composite coverages.

“Our strategy has altered very little in the last few years and next year will not bring any significant changes. We continue to focus on broad, long-term support from highly rated counterparties,” he said.

“We have been buying a little more multi-year cover, and a little more composite cover, and we have successfully broadened our relationships with a small number of core supporters. We have a clear and efficient strategy that serves our needs very well.”

With the disruption in the market, Mills thinks some players may hedge their bets for longer this year. He stresses that Beazley wants to engage in talks early, leaving adequate time to negotiate.

“There will be a mix of early movers, late movers and everything in between. Beazley will be looking for a good orderly renewal process, engaging with markets early and leaving time for a robust negotiation on coverage and price,” he said.

“We certainly don’t expect to be trying to place cat covers on New Year’s Eve. I wouldn’t be surprised to see US wind covers renewing earlier following some anecdotal signs of a shift in the supply-demand balance over the summer.