Swiss Re is not expecting to see big shifts in attachment point strategy in the coming renewals, said Gianfranco Lot Chief Underwriting Officer P&C Reinsurance, speaking at the company’s annual press meeting in Monte Carlo.
“Attachment points have been rising and therefore, the frequency nat cat of losses have been retained, largely by our insurance clients, and some reinsurance clients have capital constraints and concerns as a result of it,” Lot noted.
“Therefore structured solutions is a practice that we’ve established over over two decades that addresses exactly the specific needs that clients have in terms of capital,” he continued.
Urs Baertschi, CEO P&C Reinsurance, added: “For basically 2017 until 2022, reinsurers have not earned the cost of capital on average as an industry. The role of a reinsurer from time to time is to soar a shock, that is our role, but that cannot happen year after year.
“So there was a significant rebalancing which for purposes of this discussion really means that the attachment points went further up And you see this obviously in who picks up the insured losses.”
“In terms of attachment point strategy, we are not looking for big shifts. We’re looking for risk adjusted changes as inflation comes through for no big shifts expected for the upcoming renewals,” Lot highlighted.
“In the insurance value chain, insurance companies are best positioned to deal with attritional losses. As attritional losses are higher volume and higher frequency, they tend to be lower in absolute amounts but they’re expected to happen all the time,” Baertschi explained.
Concluding: “Reinsurers are a shock absorber for things that happen every once in a while, but at a high severity. The attachment point is a reflection of where on that spectrum insurers get involved and where reinsurers pick up to build. And to move further away from the closer risks is more of a representation of what, historically, the two industries have done.”
