Simon Burton, Greenlight Capital Re, Ltd.’s new Chief Executive Officer (CEO), has discussed upcoming changes to the firm’s underwriting approach and appetite, highlighting plans to move into the transactional reinsurance subscription markets in London, Bermuda and the U.S.
The new strategy is a first for the hedge-fund style reinsurance company, and sees it expand its underwriting appetite and raise its profile by entering reinsurance subscription markets.
To date, the reinsurer has mostly focused on and relied on a small number of closed client relationships that sees Greenlight Re take on a dominant position on their programmes, underlined by a “deep analytical dive” through the underwriting process, explained Burton, during the company’s second-quarter 2017 earnings call.
“These relationships are important and they will continue to form the backbone of our portfolio wherever margins are adequate. However, I consider it of critical importance that we also enter the more transactional reinsurance subscription markets in London, Bermuda and the U.S., where there are pockets of opportunity despite the difficult overall market conditions,” continued Burton.
The firm’s move into the reinsurance subscription markets is important as the overall pipeline contains reasonable underwriting margin for a smaller, careful and nimble entity, said Burton, and positions the company within the sector for when opportunities present themselves, “especially those that are short lived,” explained Burton.
Greenlight Re was questioned on its imminent subscription reinsurance market entry in light of intense competition and excess capacity. While Burton agreed the sector is highly competitive, he explained that for a firm like Greenlight Re, that isn’t trying to be dominant or controlling of programmes, an increase in average lines sizes and participational programmes suggests that at the margins, it can drive opportunity for the reinsurer.
“By careful use of line sizes and as far as scrutiny of risk accumulations, we believe our entry into these subscription markets can be achieved without introducing undue levels of volatility, while improving our underwriting profitability.
“We also have a large number of relationships internally, not only my own, but across the entire staff here that are probably somewhat under-leveraged. I feel confident that we can generate a pipeline of opportunity that’s relatively high quality compared to the market,” said Burton.
