As reinsurance capital is more abundant and client needs become increasingly complex, cedents are looking for holistic, enduring partnerships built on predictability and aligned profitability, Sven Althoff, Member of the Executive Board for Property & Casualty at Hannover Re, noted during Aon’s latest Capital Outlook panel.
Anshuman Srivastava, Global Chief Broking Officer at Aon, questioned a panel of experts, including Althoff, Aditya Dutt, Partner and President at ILS fund Aeolus Capital Management, and Eveline Takken-Somers, Head of Insurance Linked Investments at PGGM, to explore how capital can deliver true value today, beyond simply providing capacity.
Speaking on what it means to create tangible value, Althoff emphasised that capital serves primarily as a tool within a much larger relationship framework.
He said: “Most of our clients are interested in really holistic, broad relationships. They prefer to deal with partners where our profitability journey is similar to their own because we play across a broad spectrum of their reinsurance requirements.
“Then, of course, but that was already mentioned: the longevity of the relationship, the reliability in the relationship. So, no surprises. Strong execution power. Those are the main discussion topics I would say. It’s more capital as a tool. I’m completely with that statement, and from that point of view, it’s really the depth and the broadness of the relationships.”
Althoff shared his view of capital as a means rather than the end with Aeolus’ Dutt, who also argued that the real differentiator in reinsurance is the advisory and structural expertise applied to complex balance sheet challenges.
“Separate the discussion between capital viewed as a tool rather than an end in itself. We like to think of capital as a tool, and the really important act that everyone on this call is doing is providing the intellectual capital, the know-how, the expertise to turn that capital into a risk solution,” Dutt stated.
He continued: “So, maybe this is nothing new, but the value that we as an industry, that we as the reinsurance industry are adding, is the consulting nature, the jointly crafting a solution that helps our client run their business more effectively. That is what we show up to work every day to do, is how do we make them better at their job, and how do we help them transfer risk?
“We at Aeolus, and I’m sure at all the finest companies in the world, we view our job as to provide options, be creative in developing a financial structure that responds to what the client is asking for. I know that’s a very general statement, but over the years, I find that’s a really useful beacon to have to guide how you approach client discussions.”
From the investor point of view, Takken-Somers from PGGM, the Dutch pension fund investor, noted that long-term capital preservation and cycle resilience remain paramount.
“For us, over the last 20 years, we have been focusing on building long-term partnerships, providing reliable capacity, and planning visibility, and a mutually beneficial dialogue. Creating value through capital means being there when the capital is really needed. It is not only about the size of the investment; it is also about reliability, timing, partnership,” the executive commented.
Concluding: “Long-term investors can add value by staying committed throughout the cycle, including after major losses or when capacity is scarce. We have proven to do that, hopefully, also hopefully it’s visible to the sector. And I also believe that stable, targeted capital helps the industry manage risk and supports resilience.”
