Emmanuel Clarke, the President and Chief Executive Officer (CEO) of reinsurer PartnerRe, has said that the cycle is not dead, and that he believes we will continue to see cycles in reinsurance, too.
Clarke made the comments speaking at the annual meeting of the reinsurance industry in Monte-Carlo, in response to industry commentary that the traditional reinsurance market cycle is perhaps not what it once was.
“Cycles are not dead. I really believe we will continue to see cycles in reinsurance, too. Now, with the well-established presence of insurance-linked securities (ILS) capital, change in the cycles are less likely to come from the occurrence of property cat events,” said Clarke.
The impact of alternative, or third-party reinsurance capital on rate momentum post the losses of 2017 has been well documented, with the re/insurance industry seemingly in agreement that the capital markets is here to stay and that it will continue to play an important role.
Ultimately, the large majority of its focus is on the property cat space, most notably in the U.S., and this, combined with its impressive ability to reload and expand in time for the January 2018 renewals, served to dampen rates and flatten the cycle.
Clarke continued to note what he believes it will take to drive a large market turn.
“Big or extreme market turns will occur when the market is faced with a series or combination of large and unexpected events. These will be rare, happening once or twice in one’s career,” said Clarke.
His comments echo those of other industry experts and executives that debated the market turn during a panel debate at Monte-Carlo. Ultimately, panellists agreed that it will take a black swan event to turn the market.