Maamoun Rajeh, Chairman and Chief Executive Officer (CEO) of Arch Worldwide Reinsurance Group, remains bullish on the reinsurance sector, and expects to see increased demand for coverage in what he describes as a healthy ecosystem.
Speaking recently during Aon’s Reinsurance Solutions’ reinsurance panel, moderated by CEO Andy Marcell, Rajeh and other industry executives discussed market conditions ahead of the key January 1st, 2024, renewals.
“We remain bullish on the business for a couple of reasons,” said Rajeh. “I think first, our thesis is there is a step change in the view of risk across the industry, and there is this recalibration of risk premium and the cost of volatility. And so, we think that continues, we don’t see any reason that changes.”
Rajeh also noted the rise in insurable values, driven in part by inflation, and that as the risk pool continues to expand, he expects to see greater demand from insurers for reinsurance protection.
“And the ecosystem is healthy,” he continued. “I think this is an environment where it’s not a lack of capacity that’s driving this market, in my mind, it’s just this need to achieve returns on that capacity.”
He went on to say that both Arch Re’s and Aon’s clients are in a healthy place, adding that the insurance industry is getting rate above trend.
“And so, as a reinsurer you like that your clients are healthy, and it means that they have a less difficult time passing on some of those economics to you as a reinsurer,” said Rajeh.
In response, Marcell explained that while for large, national carriers it might be fair to say that the market is in a healthy place, the current environment presents an entirely different set of challenges for regional clients.
“I guess they found it more difficult in a challenging market like that, to get the same level of attention when it came, for example, to their cat placements compared to the bigger programmes,” said panellist Sven Althoff, Member of the Executive Board at German reinsurer Hannover Re.
“So, with less capacity being available, I think there was more concentration on the reinsurance side on whom do I really want to support and who not. And there, are our long term partnership approach that we have with our ceding companies, certainly helped us navigate through those challenging times during the renewal, because that’s really what we try to build, it’s long term partnerships,” he added.
