In the company’s Annual Report, RenaissanceRe’s (RenRe) President and Chief Executive Officer (CEO), Kevin J. O’Donnell, has claimed that the social value proposition of RenRe, and of the reinsurance industry more generally, occupies a critical and permanent link in the insurance value chain.
In the report’s letter to shareholders, O’Donnell asserted that: “While the value chain may change over time, the role we play quantifying risk and efficiently accumulating capital will always be needed, because it is essential to social well-being and economic prosperity.”
O’Donnell claimed that whilst insurance companies also diversify risk and accumulate capital, these tasks are generally limited by their tendency to promote a competitive advantage by focusing on narrow lines of business and restricted geographic areas.
In contrast, he suggested that quantifying and diversifying risk is the fundamental aim of reinsurers, and doing so effectively is what generates their competitive advantage.
O’Donnell explained: “Our value proposition derives from the fact we are more efficient than any other mechanism at accumulating the optimal level of capital to pay for natural catastrophe losses, while doing so in a way that maximizes economic prosperity over the long term.
“So while the insurance value chain will evolve over time, the need for the link we currently occupy will always exist, and we should always have a competitive advantage in fulfilling it.”
Additionally, O’Donnell insisted that RenRe’s value proposition will expand as the company becomes more differentiated and takes steps to align itself with investors, partners, and customers.
In this regard he emphasised RenRe’s focus on supporting customer growth, establishing long-term partnerships, and providing a broad range of “property and casualty coverages, consistent exposure-based pricing, strong ratings and large line sizes.”
