With a risk horizon that is constantly shifting and challenging the industry in advanced ways, Chief Operating Officer and Head of the Reinsurance division at Everest Re, Jim Williamson, discusses the firm’s approach to navigating said risks, alongside strategies for maximising growth while reducing volatility.
Reinsurance News spoke with Williamson around the annual meeting of the reinsurance industry in Monte Carlo.
Climate change has posed an unprecedented challenge to re/insurers over the last decade, and with the associated risks only increasing, companies are tasked to find new ways to deal with emerging issues.
“Although inflation and the Russia/Ukraine conflict have been the area’s most closely watched thus far in 2022, climate change also remains a key reinsurance concern,” said Williamson.
“Everest strives to stand by clients and underwrite reflecting the risk associated with climate change, even as many market participants step away from the exposure. However, we are very purposeful and specific about what we write and how, re-thinking coverage where necessary,” he added.
Williamson also discussed Everest’s effort to reduce volatility in property casualty reinsurance, noting that while seizing opportunities to improve the diversification and profitability of their book, they also positioned it further away from high-risk, high-frequency, low-attaching layers and are seeing the benefits in their results.
Williamson said: “Property is core to our underwriting strategy. We are still growing with clients in property, in a targeted and meaningful way, and in some cases, we have significantly increased property lines where we liked how the clients were handling their aggregations, business and inflation risk.
“Everest has a clear runway ahead because of the balance in our book. We have the ability to deploy additional capacity opportunistically as market pricing warrants.”
Inflation remains at the forefront of many minds, and with recent reports from global re/insurers and data agencies affirming that it is at, or above the historical peak, re/insurers have been forced to develop coping mechanisms.
Williamson explained that, in terms of strategy, “It’s vital to maintain pressure on rates, and close attention to terms and conditions, at the primary and reinsurance level to ensure that we’re moving fast enough to keep ahead of inflation.”
He added, “We’ve been working closely with clients to assess and advise them on how they can successfully account for inflation in their portfolios.”
In closing, Williamson spoke on Everest’s modus operandi, noting that with its outlook and approach to the reinsurance market, it can grow, sustain, and expand margins while controlling volatility.
“We remain a lead reinsurer and our mantra is to offer the right terms, and the right conditions at the right price. And stand ready to deploy significant capacity to continue to support our clients as needed.
“We will do all that we can to find suitable alternative structures where others may flatly decline a client’s request and while we collaborate globally with clients, we can also offer expertise and make decisions at a local level. Our robust capital base of in excess of $12 billion in shareholder equity and debt, further supported by our Kilimanjaro Cat Bonds and Mt. Logan third-party vehicle, gives our clients confidence.
“In reinsurance, we’ve been working to seize opportunities to diversify and improve the profitability of our book and we’re happy with the balance of property and casualty,” said Williamson.