14 September 2016 Insurance

Hiscox Re: steady as it goes

As the market faces tough conditions with investment returns at historic lows and rates softening, Hiscox Re is continuing its strategy of taking measured steps and remains unwilling to act rashly, said Jeremy Pinchin, chief executive officer of the company.

Speaking to Monte Carlo Today, Pinchin pointed out that the company was founded in 1901 and had every expectation of making it to its 200th anniversary by playing to its strengths of keeping its staff skillsets intact, avoiding attritional losses and taking measured steps in reaction to market developments.

“Rates have consistently come down over last four years,” Pinchin said. “I do think that there is a risk that continual rate pressure with moderate losses is actually one of the most difficult things for the market to deal with.

“It eats away at returns, it eats away at reserves, there’s no investment income to protect people and you are already seeing attritional losses from such catastrophe losses that have been hurting reinsurers.

“That’s not sustainable for a short to medium period of time. This is not the time to do anything drastic. We at Hiscox Re have a clear strategy of avoiding exciting headlines—there is no need to be rash.”

Pinchin added that he regards Hiscox Re as having an advantage over some rivals—it is based in Bermuda. A wide range of positive factors come from being based on an island that is well regulated, well respected and also has a reinsurance-friendly government. He cited the announcement that Bermuda has been awarded Solvency II equivalence as an example of a combination of the above.

“Bermuda is ideally placed for showing investors and clients that we are heavily invested in both sides of the market,” Pinchin said. “It also happens to be the world’s third largest reinsurance market, and that is in itself a reason to have a reinsurance operation there.”

He added that one area Hiscox Re was studying carefully was cyber risk, adding that the company had taken a slightly different approach by providing a reinsurance backup to those who have written a lot of direct cyber risks. This enables Hiscox Re to take quite a high level of exposure to the cyber market, but on a defined exposure basis, he said.

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