While many carriers look to lower the volatility of their book by cutting their property catastrophe exposure, reinsurance giant Swiss Re intends to grow further in the natural catastrophe space and sees this as a real growth opportunity, according to Group Chief Underwriting Officer (CUO), Thierry Léger.
Reinsurance News spoke with Léger around the 2022 meeting of the reinsurance industry in Monte Carlo. He discussed opportunities in the current hardening market, explaining that Swiss Re intends to expand its portfolio.
“Where there are challenges, there are definitively also opportunities. In general, Swiss Re’s risk appetite remains large,” said Léger. “Looking at specific lines of business, we intend to further grow and diversify our natural catastrophe portfolio, as we believe this is a real growth opportunity for us.”
Global geopolitical tensions, the current macroeconomic landscape, and climate change have driven greater demand for risk protection. And, as risk awareness grows alongside exposures, it’s expected that demand for insurance and reinsurance will continue to rise across all businesses and regions.
For some, the recent loss and claims experience in certain regions, such as Florida, has been a real challenge to navigate, and pushed combined ratios into unprofitable territory. In response, many reinsurers have pulled back from the catastrophe space and sought growth in other areas in an effort to lower volatility and improve margins.
But for large, global reinsurers like Swiss Re, the challenges engulfing the catastrophe space also gives rise to opportunity.
“While it has been challenging for the market to keep up with growing loss trends and weather-related risks such as secondary perils, we feel comfortable to underwrite this business thanks to our proprietary modelling capabilities,” said Léger.
He went on to explain that Swiss Re is both able and ready to grow its nat cat book further at the right conditions.
“We see nat cat as an attractive risk pool where we have good models and very long-term experience,” said Léger. “The recent years have been challenging so further improvements on the data, wording and pricing side will be required before putting more capital at risk.”
In light of current market dynamics it’s not surprising that the property space has been a hot topic throughout the year, and this was evident during discussions at RVS 2022 in Monaco.
But it’s not the only line of business where Swiss Re sees opportunities.
“Another area with growth potential is the L&H protection gap. The pandemic has led to increased risk awareness and demand in this area,” explained Léger.
At the same time, he continued, demand for protection is growing in specialty reinsurance following Russia’s invasion of Ukraine.
“Generally, we see specialty as attractive, as long as war-exposure is managed appropriately. Key market trends such as infrastructure investments and food security also present significant growth opportunities.
“The same is true for the accelerated energy transition timeline which requires risk knowledge for renewables,” said Léger.
