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Baden-Baden: Exploring the trends in European reinsurance
October 28, 2019
This month sees the annual reinsurance meeting in Baden-Baden. Following preliminary discussions in Monte Carlo in September, reinsurers, cedants and brokers gather in the German spa town of Baden-Baden every October to get down to the nitty gritty ahead of the January 1 renewals. Bertrand Romagné, Chief Executive Europe and Chief Underwriting Officer P&C International Re, tells us what he expects from the upcoming meeting and the renewal season.
What are the dynamics affecting the European reinsurance market as we head into the renewal season?
The past year has not been a quiet one in terms of industry losses – severe weather events in Italy and Germany at the end of 2018 and the beginning of 2019 are a case in point. Those losses come on top of heavy catastrophe years for the worldwide industry in 2017 and 2018. In addition, the persistent low interest-rate environment – and even the potential for negative interest rates – is likely to impact the financial results of many reinsurers. Rates have been hardening in the retrocessional market and the insurance market is also seeing some underwriters tighten terms and conditions and prices for coverage.
Against this backdrop, however, there is still plentiful capacity available for attractive risks. European cedants are keen to buy reinsurance both to protect and smooth their balance sheets and to meet their Solvency II risk-based capital requirements. It’s an interesting dynamic, and discussions at this year’s Baden-Baden event will, no doubt, be lively. We want to underline to our clients that we are here for the long term.
How is the combined AXA XL responding to clients’ reinsurance needs?
More than a year after the acquisition of XL by AXA, clients have seen that our appetite for reinsurance remains strong. We are a long-term reinsurance partner committed to this marketplace.
And our ability to harness the capabilities of the wider AXA Group is something that reinsurance buyers really appreciate. For example, we can tap into the expertise of AXA Liabilities Managers for our clients’ run-off requirements. AXA Climate can write parametric covers for weather-related events that enable us to offer clients coverage for business that we might not have been able to underwrite previously.
How do you see the future of reinsurance?
I believe that reinsurance has a vital role to play in closing the protection gap – the difference between economic and insured losses. As part of this effort, AXA XL is working with government pools and not-for-profit bodies to try to find ways to design reinsurance mechanisms that will make coverage more suitable for certain risks that currently are underinsured. Here again, we are working with AXA Climate to explore ways to devise parametric solutions that might help industries and communities that are at risk of weather-related catastrophes such as windstorms, severe floods or drought.
The alternative capital that has come into the reinsurance marketplace in recent years – and looks set to stay – can also play a role in this. Between us I believe we can find ways to lessen the protection gap and help vulnerable communities to recover more quickly from losses.
Outside of reinsurance, what do you enjoy doing?
I studied civil engineering at university and that is the career path I would have taken if I hadn’t gone into reinsurance. I still love observing engineering – particularly the bridges of Venice, which is one of my favourite places in the world.
I enjoy spending time with my family and friends and holidaying in Italy.