Reinsurance News

“Many carriers are pulling out of property cat, but we are not afraid”: Ariel Re’s Maccioni

1st November 2022 - Author: Jack Willard

With a growing number of reinsurers cutting capacity for property catastrophe re/insurance and causing a hard market, Reinsurance News had the chance to speak to Ariel Re’s London-based Property Underwriters Tom Orton and Giovanni Maccioni ahead of the January renewals about the company’s current appetite and future plans for property catastrophe risk.

“We’ve always prided ourselves on having a discerning risk selection and attempting to pick the best risks to maximise the most amount of return to our investors – whilst at the same time helping our clients get the coverage they need,” said Orton.

“I don’t think we’re going to deviate from that strategy. Ariel Re has capacity to deploy meaningful capital at the right price, with the right conditions, to support our brokers and clients – we will continue to look at each individual programme and each individual client in order to price the risk appropriately and maximise shareholder returns.

“In the lead up to the 1/1 renewals, we are not just striving for increased premiums – we want to understand all of the potential risks that could occur, focus on the contract language, and understand all the possible losses that may happen in that individual reinsurance product.

“Using our pricing tools, we can narrow that scope down to perils and regions that match our risk selection and deliver material capacity for brokers and clients at sensible terms and conditions, while also providing comfort for our investors. Our risk appetite is for “clean” named natural perils reinsurance coverage for cedants who are willing and able to provide transparent and complete data,” Orton said.

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Maccioni added: “Many carriers are pulling out of property cat, but we’re not afraid to write this class of business – as long as we have a well-thought-out strategy and our risk criteria are met.”

He explained that in negotiations with brokers and cedants, Ariel Re has been totally transparent about its risk appetite. “We have approached discussions with our cards facing up, explaining clearly and concisely the pricing, terms, contract wording and reinsurance structure which fit our current risk strategy. If these conditions are met, then we are willing to write more and larger lines. If not, we will reduce our position.”

Moreover, both Orton and Maccioni acknowledged the importance of having access to risk-willing investors who understand the nuances of the reinsurance market in the run up to the renewals. Ariel Re is also looking to raise capital to take advantage of the impending hard market, as well as supporting further growth and expansion opportunities for the company.

“Any capital we will raise will help businesses get the reinsurance they need in these difficult times,” said Orton.

Maccioni added: “The timing is fortuitous – at this time of year, Lloyd’s syndicates look for more capacity from third-party investors. Ariel Re is in a good position because we have a compelling story. We offer a range of innovative reinsurance solutions, which is needed in the market now more than ever. Ariel has established platforms in place – both in Bermuda and at Lloyd’s – strong historical results and performance, sophisticated technology and an experienced team in place.”

Furthermore, both Orton and Maccioni expressed how cyber is a major growth area for Ariel Re.

“The cyber market is going to fundamentally change because at the moment it is predominantly offered on a quota share basis. The amount of capital coming into the insurance and reinsurance market is very limited, and the demand for newer capital is always increasing. Cyber is a market that will have to change, and develop into a shorter tail product,” said Orton.

Maccioni added that even though Ariel Re is open to exploring new opportunities in the market, it is a property cat reinsurer and that business line will remain core to its overall strategy.

He said: “Conditions for property cat are better than they have been in decades. Ariel Re has some of the best pricing and portfolio management systems in the business, and we closely align our analytics with our underwriting. We are well-positioned to take advantage of that the opportunities this hard market has to offer.”

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