The Chief Financial Officer (CFO) of global insurer Zurich, George Quinn, recently discussed the firm’s increased reinsurance purchase as it continues to tweak its protection in light of attractive pricing.
Speaking during the insurer’s Q4 2018 earnings call, CFO Quinn highlighted the firm’s increased utilisation of reinsurance, especially around the casualty arena, and also underlined some tweaks and changes to some of its reinsurance programs.
“We increased capacity under the global catastrophe treaty. We’ve actually put a cover in place. It’s an April 1 renewal but we anticipated the capacity increase, so we changed it already at the end of last year,” said Quinn, adding that this increase is connected to the rise in some incoming catastrophe exposure.
Zurich has a significant quota share arrangement across its liability book, and Quinn explained that while it’s unlikely this will be changed in the short-term, absent the right opportunity for growth on the retail side, the intention here is to build a long-term relationship.
“We view it as strategic, but it’s not about the performance of that particular book, it’s about the mix that we retain,” said Quinn.
The CFO continued to note that Zurich has “tweaked a number of other things,” which includes changes to its financial lines program.
In 2016, Zurich put an aggregate cover in place for its financial lines business, designed to contain some of the volatility that had been suffered in the segment. However, Quinn said that Zurich has never really come that close to triggering the contract, and, as a result, has restructured the program with a panel of reinsurance companies in 2019 in an effort to “try and bring it a bit closer to the money and maybe work a bit harder for us.”
On general market conditions, Quinn said that Zurich is seeing “attractive pricing,” which, underlines the fact that despite two years of high catastrophe losses, reinsurance remains a buyers market.
“So, risk-adjusted we are paying the same rates as we’ve paid before. And, in general, we would continue at the margins to buy a bit more reinsurance cover just given what the market currently offers. That’s what we did on reinsurance,” said Quinn.
The global insurance company recently announced its results for 2018, revealing that increased business operating profit keeps the firm on track to meet its financial targets in 2019.