While the COVID-19 pandemic brings new challenges, the reinsurance industry is once again performing well during a time of major financial market disruption, according to Paul Schultz, Chief Executive Officer (CEO) of Aon Securities.
As part of our sister publication Artemis’ series of video interviews with experts and leaders from across the traditional and alternative reinsurance capital space, we spoke with the head of re/insurance broker Aon’s capital markets unit, Schultz.
Prior to the global spread of the COVID-19 virus and on the back of a late January 1st reinsurance renewals season, companies were eager to complete their Japan-focused April 1st renewals in a more orderly fashion.
The spread of the COVID-19 outbreak and subsequent work from home orders across many parts of the world has served as a test for the business models that underpin industries of all shapes and sizes.
Initially, this raised some questions around the upcoming renewals as firms adjusted to new normals. But, for the reinsurance industry, for the most part, it appears to be business as usual.
“We always hesitate to use business as usual in a time of uncertainty and crisis. But, I think broadly speaking, we have just come through the April 1st renewals as a firm, as an industry, and to the extent that you can use those words, it was business as usual,” said Schultz.
“Now, our firm and the market is focused on the June 1st, July 1st renewals, and that appears to be orderly. I would say that we are certainly working with clients and talking with clients broadly around capital positions and the impact not only on the liability side, but the asset side, and just making sure that we fully appreciate the state of the world and the state of our clients, and the state of our markets.”
Insurance and reinsurance companies’ first-quarter 2020 results show that COVID-19 is having an adverse effect on both investments and underwriting, although just how costly this will be remains widely uncertain and depends on numerous factors, including the length of the pandemic.
“Reinsurance generally is preforming quite well. Reinsurance I think was one of the industries that really stood out in terms of performance around the last major dislocation in the financial crisis. I think reinsurance again is performing quite well,” said Schultz.
One thing that’s become clear as a result of the current situation, is that advancements in technology has enabled entire industries to ensure continuity, enabling smooth transitions as thousands of employees went remote and international travel became disrupted in a major way.
“What I would say, is technology has proven itself in spades, really, throughout this. Most of the calls we are doing these days are video and so we are connecting as personally as we can, whether with colleagues or with clients, and I think the technology has enabled us to perform at a high level still…
“And what I would say is connectivity, at least in our firm, not only for Aon reinsurance but just across Aon, at any one point in time we have 60% of our colleagues on WebEx and video and when you look at some peak times we have like 80,000 WebEx connections, and we have 50,000 employees. And so, obviously there’s a great amount of connectivity across our firm with investors and clients and markets, and all of the people you want to talk to.
“Connectivity and communication, which is really critical at this time of uncertainty, I think people are stepping up, we are trying to be creative in the ways that we connect with our team,” said Schultz.
The full video interview is embedded below, but can also be viewed in full, along with other Artemis Live video interviews, here.