Cat losses and the role of local knowledge
How much rates may rise in the aftermath of big cat losses is a major concern of delegates in Baden-Baden, Johannes Hartmann, chief executive of VIG Re, tells Baden-Baden Today, as he also explains the reinsurer’s commitment to Europe.
Conversations at Baden-Baden this year are focusing on how much recent cat losses will affect rates in Europe, with a second underlying topic of technological innovation within the industry, according to VIG Re’s CEO Johannes Hartmann.
“There is a focus on topics such as insurtech and to what extent the industry is reinventing itself to cope with challenges,” he says.
Regarding the impact of the cat losses, key players are still holding their cards close to their chests, he says.
“It’s like a poker game. Everyone acknowledges it was a massive earnings event for reinsurers. No reinsurer claims that it is a capital issue for himself but we know there are ones that have had a blow on their capital and will have to recapitalise.
“There is also a lot of discussion about what will happen in the retro market and how much alternative capital such as insurance-linked securities (ILS) is prepared to reinvest.”
Discussing VIG Re’s recently opened office in Germany, Hartmann says the office underlines the company’s commitment to the region, and that VIG Re has been able to gather German clients much more quickly than had been expected, not least because VIG Re suits the traditional tastes of the industry there.
“You can see a very clear preference from clients to partner with more traditional European providers. In addition, around 30 percent of our non-VIG business is now coming from the German market,” he says.
Since February VIG Re has had a new strategy in place which fits the group’s philosophy of being more diversified than other players.
“We are very much involved in creating additional value for local companies, supporting them in their growth initiatives,” Hartmann says.
He adds that VIG Re’s strong position as a specialist reinsurer in central and eastern Europe is built on similar qualities to those that underpin its success in Germany:
“If you do the analytics we are clearly outperforming our competitors. The reason for that is twofold: we know the local market so if there is an issue with the regulator, for example, we would know that already from our insurance companies and we can address it much faster.
“Second, we are operating on a low-cost basis whereas other reinsurers have trouble because their internal costs are too high. We are very familiar with the business culture in the region,” he explains.
VIG Re now has more than 300 clients in the region and this high market penetration means that while some growth opportunities still exist, they are becoming fewer.
“It’s harder now for us to find new clients in the region because either we have threats to overcome—such as we are perceived as a key competitor—or there is a reason we do not want to do business with them—such as they are companies that we believe don’t have a long-term perspective.”
This has led VIG Re to work towards further internationalisation.
“This was the biggest switch for us,” says Hartmann. “Before, we had a commitment to operate only in markets where we also have primary insurers, because of the market intelligence that brought us.
“We believe we can work in western Europe with the very successful market model we have in Germany, but our challenge is that we still have to build up our market intelligence to be closer to the market.
“We have hired Patrick Chevrel from PartnerRe to lead our western European expansion.
“He will head the company’s newly established underwriting team in western Europe to develop the business with clients in France, Belgium and Luxembourg,” he explains.
“At PartnerRe Patrick most recently served as the head of global accounts. Previously, he served as head of France/Benelux P&C until 2010, and head of specialty property lines until 2013.”
Chevrel’s appointment will help drive forward VIG Re’s growth in the region across all lines of business including property, motor, liability and engineering, and Hartmann expects that his wealth of experience of the French and international reinsurance markets will provide the “closer to the ground” knowledge required to give VIG Re strength in the region.
Within western Europe the company will focus on mutual insurance companies, and also on business that is cost-sensitive.
“We will also look to use VIG Re as an enabler or gateway to bring collaborations between those clients and other companies, because if you are a small mutual you sometimes don’t have critical resources in specific areas—we can help with that,” Hartmann concludes.
Get the latest re/insurance news sent to your inbox every day - Sign up to our free email newsletters
Other stories from the Baden-Baden Day Three newsletter
HIM losses will be capital event for some syndicates but Lloyd’s steady on cat
Scale of Q3 cat losses could be the biggest ever insured cat event
Russia’s national reinsurer makes its mark in year one
RPA more disruptive in re/insurance than ‘useless’ blockchain
Volatility drives demand for quota shares
Global post-loss rate hikes expected
2017 nat cats show value of objective event data
Cat bonds key to closing protection gap
Know your exposures before you talk price
Losses may signal end of soft market
Nat cat losses are an opportunity to prove resilience
Growth of cyber offerings a hot topic
Qatar Re to cash in on US rate recovery
German motor market needs readjusting
Recent cat losses could make ILS collateral more attractive
Soft market still a concern for renewals
Reinsurers must protect their margins
Disposal of legacy business can increase efficiency
Rate hikes unlikely: Caribbean cat facility
P&C execs bullish on pricing following record cat losses
E+S Rück forecasts growth in Germany
London Market launches campaign to tell its story
Cyber risk modelling gets an upgrade
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Intelligent Insurer
Newton Media Ltd
Kingfisher House
21-23 Elmfield Road
BR1 1LT
United Kingdom