Keep a level head, ignore the gossip: Gen Re

It can be hard to keep a level head in what is such a competitive and crowded marketplace but this is what reinsurers must do during the forthcoming renewals, believes Mo Tooker, head of global property and casualty business at Gen Re.

He describes maintaining this balanced perspective as being one of the biggest challenges facing reinsurers. Gen Re will be trying to make all its decisions based on the facts alone.

“Maintaining a level head in this market is incredibly difficult. Different parts of the market are staking out their positions and hoping that they can sway markets with frequent and colourful messages,” Tooker said.

“We have been talking a lot about bias and the role it can play in our decision-making especially in a soft market. We will be working hard to focus on the facts of each renewal and new piece of business and trying not to get caught up in the raucous market chatter.”

Tooker believes that it will be more beneficial for reinsurers to add value to their clients in other ways in these market conditions. He cites recent reinsurance market research in which around 70 percent of European buyers said they value discussions with reinsurance companies as their most important source of information about reinsurance.

“That speaks right to the core of our direct business model: risk carrier talking to risk carrier,” he said. “We are optimistic that our unique direct, value-added model will be a critical differentiator for us during the 2015 renewals.”

Such good reinsurers will also reap the rewards for supporting their clients historically in these market conditions.

“This is a time in the market where the work you have done over the many prior years will be especially important. A differentiated and valued position is created over many years and will be a critical factor in an increasingly crowded marketplace,” Tooker said.

Gen Re will be homing in on the issues that are important to each specific client—differentiating itself from the crowd. In such a competitive environment, Tooker believes this will set it apart from its peers allowing it to deal with the specifics of clients’ needs rather than being concerned about wider market trends.

“We will be trying to cut through the market chatter and get to the issues that are specific to each customer,” he said. “We believe that our direct distribution coupled with our underwriting, claims and ERM expertise offers a unique perspective in this crowded market.

“We will be using our unique perspective to talk about the customer’s specific issues rather than getting caught up in where the market said a certain line of business is or is not heading.”

For Tooker, the recent influx of alternative capital into the market has not had a major impact on the reinsurer directly. Many reinsurers have suffered as a result of the intense competition in some lines of business such as US property-cat.

This dynamic has also had a knock-on effect in that it has forced some players into other lines of business, intensifying competition across the board.

While Gen Re has remained relatively unscathed, Tooker admits it has had a wider impact on the market—one consequence of this being that growth is unlikely in 2015.

“Alternative capital has not had a meaningful impact on our current book’s profitability or growth. That said, the influx of interest in our industry from alternative sources coupled with traditional reinsurance supply outstripping demand is creating a very defensive mindset from the reinsurance marketplace. I would anticipate that in 2015 additional growth in our PC business will be unlikely,” he said.