Global reinsurance giant Swiss Re has better protected its Corporate Solutions arm for 2018, which includes a lower attachment point and the addition of aggregate reinsurance protection to cover a series of events similar to that witnessed in 2017.
This is according to Edouard Schmid, Group Chief Underwriting Officer (CUO) at Swiss Re, speaking during the firm’s recently held fourth-quarter and full-year 2017 earnings call.
After the devastating impacts of 2017 catastrophe events, which Swiss Re expects to result in losses of $4.7 billion for the firm, management was questioned during its Q4 earnings call on any changes to its reinsurance protection for Swiss Re Corporate Solutions, the company’s large, commercial primary insurance arm.
“On the CorSo (Corporate Solutions) reinsurance protection, it is fair to say that the CorSo loss is a bit higher than its peers, because again there’s a significant part of the business in the U.S.
“So, it is also more prone to cat exposure and intentionally we only bought a really severity driven protection in the past. We consciously accepted a higher volatility, because we can carry that on the overall balance sheet,” said Schmid.
The CUO continued to explain that the reinsurer reviews its reinsurance protection on an annual basis, and, heading in 2018, “we actually decided to lower the attachment point, so the protection attaches a little bit quicker.
“And also, we added so called aggregate cover, so second and third events will also be covered in a year similar to what we’ve seen in 2017, with a series of, let’s say, medium sized cat events. So, CorSo in 2018 is better protected, so the volatility is dampened should something similar happen again,” said Schmid.
Interestingly, Schmid also revealed during the call that the majority of the CorSo reinsurance protection is internal, being ceded to the reinsurance balance sheet.
“The margin’s healthy in that business…so as in the past, there is some external but the bulk is ceded from CorSo to reinsurance,” Schmid explained.











