Kevin O’Donnell, President and CEO of Bermuda-based reinsurer RenaissanceRe (RenRe), has said that he is “very optimistic” about opportunities for the company as it head into the January 1 renewals, despite it having reported a large underwriting loss for Q3.
RenRe is anticipating a supply/demand imbalance in certain areas of its portfolio at 1/1, particularly for capital-intensive risks driven by continued COVID uncertainty and another active year for natural catastrophes.
“Looking forward to the January renewal, we expect ample opportunities to deploy significant additional capital in both of our segments and across our platforms,” O’Donnell said.
“Many markets are exhibiting supply/demand imbalances. And overall, we are seeing strong rate momentum across all lines with stable or improving terms and conditions.”
RenRe reported an underwriting loss of $206.1 million for the third-quarter of 2020 and a combined ratio of 120.6%, as large loss events resulted in a net negative impact of $422.4 million and added a significant 43.4 percentage points to the combined rati
But O’Donnell says the company has “focused for many years building strong positions on high-quality programs.”
“As the market hardens, we believe we are preferentially poised to expand our share on existing programs, while being the first call for new opportunities, both at improved economics,” he explained.
O’Donnell expects RenRe’s risk selection practices to prove valuable at the renewals due to the combination of historically low interest rates, large Q3 cat losses, and trapped capital, which have together put additional upward pressure on reinsurance rates.
“We have legacy positions on the best programs, first call status to capture opportunistic and off-cycle business, and significant capital to support growth on new and existing profitable opportunities,” he noted.
“In conclusion, we find ourselves in a very enviable position heading into the January 1 renewal cycle. Market conditions continued to improve as the natural catastrophe activity of the quarter further restricts supply in an already-unbalanced market,” O’Donnel continued.
“As the industry grapples with the uncertainties from climate change and COVID-19, our independent view of risk provides us with an enduring competitive advantage. I am confident that we can profitably deploy material amounts of capital in this environment and continue creating long-term shareholder value in 2021 and beyond.”
