Reinsurance has changed in several significant ways over the past few decades, but its foundation remains rooted in great people. That is what I’ll miss when I retire from XL Group at the end of this year.
After 36 years in this business, I can say that reinsurance has been a wonderful profession. I have had the good fortune to travel the world – during my career, I have lived in North America, Bermuda, London and France, and I have met many different, wonderful people. That experience has made me a better human being, without doubt. The international texture of the reinsurance business is something I’ve always found attractive.
Reinsurance is very much a B2B kind of business, involving very large transactions and sophisticated decision-makers. One of the big changes I’ve witnessed is that the technology around the decision-making process has advanced tremendously.
<p>After 36 years in this business, I can say that reinsurance has been a wonderful profession.</p>
When I first started in reinsurance, actuaries were not common in the property and casualty side of the business; they were more involved in life insurance underwriting. In addition, the use of cat modeling, sophisticated economic capital models and other analytical tools have allowed customers to make more sophisticated buying decisions.
Relationships have always been important and always will matter in this business. In the early days of my career, a lack of technology in reinsurance made the relationship part absolutely critical to success. Today, the tools available on both sides are much more sophisticated, and they help both ceding insurers as well as reinsurers.
I have been fortunate to spend much of my career as part of XL Group, and our reinsurance operations have performed well historically. I attribute our record of success to two things. One is XL’s strong focus on technical analysis and underwriting profitability. The other key is our culture.
I take a great deal of satisfaction in helping bring financial rewards for our shareholders, but even more rewarding is the culture we’ve built at XL. We are admired across the marketplace, even by our competitors. The stature we enjoy today is because of a reputation built by the behaviors of our people.
You can tell that your organization has a good culture when people behave in ways they should when nobody is watching them. Hallmarks of XL’s culture include very high service standards, transparency, professionalism and fairness. We also have consistency in the right team of people; the average tenure of the senior people in our reinsurance operation is at least 15 years.
A significant enabler of our focus on understanding and underwriting risk profitably is XL’s flat management structure. Our most senior people, including me, are involved in specific underwriting decisions.
The reinsurance market in Asia-Pacific is very different from the market in North America or Europe. Investments that XL has made in our underwriting platform enable property underwriters in Singapore, for example, to use the exact same tools as underwriters in Le Mans. I can sit at my desk and see exactly where we are as to rate and terms. This allows us to configure our portfolio by line and geographically, applying a consistent approach throughout our organization.
XL Group benefits from a dual platform as both a primary insurer as well as a reinsurer. In fact, it’s a perfect way for us to conduct our reinsurance business. Being part of XL allows us to execute a strict cycle management strategy, leverage expense resources and keep our focus on the bottom line rather than the top line. I am confident that our culture and our track record will continue.
After nearly four decades in reinsurance, I will certainly miss the people at XL and the reinsurance industry, many of whom I’m proud to count among my friends. In the next phase of my life’s journey, I’m looking forward to some down time and staying off of airplanes.
Jamie Veghte is the Chief Executive of Reinsurance Operations at XL Group.
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