Moses Ojeisekhoba, managing director of reinsurance at Swiss Re, explained this week that the reinsurer expects prices to rise on year-end renewals, regardless of the structure traded and if its appetite for Catastrophe risks continue to grow, the reinsurer will remain underweight in Florida for the time being.
Speaking during a briefing at the Monte Carlo Rendez-vous event, Ojeisekhoba went over some of the dynamics affecting price and appetite for the reinsurer.
Commenting on the factors that increase exposures and risk, he explained: “On the inflation side, we look at it more from an exposure perspective, so not so much from a risk perspective, so we separate those two things from exposure in relation to risk.
“Inflation drives values up significantly, which will impact premium increases, but not rate increases, it’s more exposure that increases.
“On top of that, it’s clear that when we look at the risk itself, from the secondary perils and a range of other things, we take a view of the risk and when they change the underlying price , you also get rate increases.
“So it’s about those two factors. For us, as a reinsurer, it’s very much dependent on whether you’re writing pro-rated business or not and whether you’ve transformed the risk, and then determining exactly what the rate increases will be.
But he ended that section of the briefing with a forecast for renewals, saying, “Suffice it to say that, almost, no matter what the structure looks like, we expect prices to rise and there is a wide range around it. ”
Speaking of natural catastrophe risks and Swiss Re’s appetite for them, Ojeisekhoba points out that the appetite does not change, but even the largest reinsurer is cautious in a certain region of the world.
“There is clearly a greater demand. Greater demand for reinsurance, greater demand for insurance,” he explained. “The business has grown and we expect it to continue to grow.”
Ojeisekhoba went on to say, “This growth is being driven by two key factors, and that is inflation. Global exposure is simply more expensive and because it is more expensive it is inflation driven.
“There are clearly greater risks, whether they come from secondary perils or primary perils, the concept of risk itself is greater.
“For this reason, we anticipate and anticipate that over the next three years, premiums for nat cats will continue to grow.
“We are a major player in the nat cat market, all over the world. We have a healthy market share, one of the highest market shares. We have no intention of changing our appetite.
However, this is not true everywhere in the world and the unchanging nature of appetite also applies to places where Swiss Re is more cautious, such as Florida.
“In terms of risk appetite in the United States for nat cats, we are writing in the United States and our risk appetite remains exactly the same,” he said.
Adding that, “We have always been underweight Florida as a market for a variety of structural reasons and our view of the prices you are generating being appropriate for the exposure you are taking around Florida will remain the same for the moment.
“We see no reason for this to change. We still believe structural changes need to happen in Florida, but we plan to continue writing our fair share in the US market through 2023.”
Watch our recent interview with Swiss Re CEO Christian Mumenthaler, who explained that price gains made by the industry have largely been absorbed by issues elsewhere that affect the balance sheet of reinsurance.