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MONTE CARLO TODAY Sunday September 8, 2013

No news is good news in reinsurance: SCOR CEO

What’s inside

No news is usually good news in reinsurance.” That was the message from Denis Kessler, the chairman and chief executive WNÅKMZ WN  \PM ZMQV[]ZMZ ;+7: LQ[K][[QVO details of the group’s new strategic plan which PMXZM[MV\ML\WQV^M[\WZ[WV;MX\MUJMZ <PMXTIVKITTML7X\QUIT,aVIUQK[NWTTW_[ Q\[ ;\ZWVO 5WUMV\]U XTIV _PQKP KW^MZ[ \PM period 2010–2013, and which was updated in ;MX\MUJMZ  NWTTW_QVO \PM IKY]Q[Q\QWV WN  <ZIV[IUMZQKI:M¼[UWZ\ITQ\aXWZ\NWTQW <PMUW[\ZMKMV\XTIV_PQKP\ISM[\PMÅZU to 2016 and comes just three months after the KWUXIVa JW]OP\ \PM =; TQNM J][QVM[[ WN  /MVerali, is the continuation of the same strategy. <PM NW]Z [\ZI\MOQK XQTTIZ[ WN  \PM J][QVM[[ ZMmain unchanged, Kessler said, as does its target NWZ IKPQM^QVO XZWÅ\IJQTQ\a WN   JI[Q[ XWQV\[ IJW^M\PMZQ[SNZMMZI\MW^MZ\PMKaKTM <PM KWUXIVa _QTT OZW_ J]\ [\MILQTa 3M[[TMZ [IQL 1\ LWM[V¼\ XTIV IVa IKY]Q[Q\QWV[ J]\ any opportunities that do emerge would only JMKWV[QLMZML_Q\PQV^MZa[\ZQK\XZM[M\KZQ\MZQI ¹5IVaKWUXIVQM[IZMNWZKML\W]VLMZOWUI[[Q^M ZM[\Z]K\]ZQVO IVL N]VLIUMV\IT KPIVOM[ JMKI][M\PMQZJ][QVM[[UWLMTQ[VW\[]Q\MLVWZILIX\IJTM\WUIZSM\KWVLQ\QWV[WZ\PM_IaIXIZ\QK]TIZ [MK\WZPI[KPIVOML5IVaaMIZ[IOW;+7:_MV\ through the same thing,” Kessler said. ¹:QOP\ VW_ _M IZM QV ^MZa LQNNMZMV\ XTIKM 7]Z J][QVM[[ UWLMT Q[ ZWJ][\ IVL _MTT ILIX\ML

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11 TOP TIPS FOR MANAGING YOUR RATING AGENCIES

6

JUNK BONDS MAY NOT BE GARBAGE AFTER ALL

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SMALLER PLAYERS WILL INCREASINGLY USE ILS

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BRIT EXPANDS NETWORK WITH BERMUDA OFFICE

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INDUSTRY WELL PLACED TO HANDLE CATS

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BROKER TEAM FROM JLT RE CYCLE TO MONTE CARLO

10 INFLUX OF CAPACITY IS A WORRY FOR PRICING

D

2

5

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10 ENDURANCE EXPANDS CAPABILITIES IN ASIA PACIFIC 13 QBE EUROPE TO PROVIDE CAPACITY TO COBALT 9

13 ASBESTOS TO HIT REINSURERS 14 REINSURERS MUST WORK WITH GOVERNMENTS 14 BERMUDA SET TO BECOME ILS GLOBAL LEADER

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16 AHJ CHAIR PONDERS 40 YEARS OF CHANGE 16 CHUBB TO OFFER CYBER SECURITY AT LLOYD’S

Denis Kessler, SCOR \W \PM MV^QZWVUMV\ _M IZM WXMZI\QVO QV ;W _Pa change things? If we had decided we were not suited to this environment, we would have factored Q\QV\WW]ZJ][QVM[[XTIV*]\_MIZM_MTTLQ^MZ[QÅMLIVL_MTTXW[Q\QWVML(Continued top of page 2)

17 LEGACY OUT— INVESTORS IN

0M [Ia[ \PM LQNNMZMV\ ^MPQKTM[ JMQVO ][ML to cover these risks are sometimes distracting KWUXIVQM[NZWU\PMNIK\\PI\[WUMWN \PQ[J][Qness is under-priced. ¹<PMJQOOM[\\ITSQVOXWQV\\PQ[aMIZ_QTTJM the capital markets and their feverish interest in \PMZMQV[]ZIVKMJ][QVM[[ºPM[IQL ¹0MLOM N]VL[ XZQ^I\M MY]Q\a IVL VW_ \PM XMV[QWVN]VL[IZMITT[KZIUJTQVONWZIXQMKMWN  \PM IK\QWV IQLML Ja IV IZUa WN  JIVSMZ[ IVL lawyers looking to replace lost revenue from the

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14

18 GIC RE: SPREADING ITS WINGS BEYOND INDIA 19 HEADING FOR A SOFT MARKET

Beware under-priced business in whatever form Q^MZ[QÅKI\QWV[PW]TLVW\JMZMOIZLMLI[I XIVIKMIJaZMQV[]ZMZ[IVL\PMQVL][\ZaI[ I_PWTMU][\JM_IZaWN \PMKWV[MY]MVKM[WN  under-pricing catastrophe risks however they are packaged. <PI\ Q[ \PM [\IZS _IZVQVO UILM Ja <IL 5WV\ZW[[KPIQZUIVIVL+-7WN /MVMZIT:M [XMISQVO QV \PM KWV\M`\ WN  \PM QVÆ]` WN  IT\MZnative capital that has entered the industry – [WUM\PQVOPM[Ia[_QTTJMIJQOLQ[K][[QWVXWQV\ I\\PMaMIZ¼[5WV\M+IZTW:MVLMb>W][

1

UWZ\OIOMJIKSML[MK]ZQ\aÅI[KW “But there are two underlying issues: the industry’s dependence on cat models and that diversification is not a panacea. If you put a portfolio of under-priced risks togethMZIVLKITTQ\IJWVLWZIVQV[]ZIVKMTQVSML [MK]ZQ\a aW] [\QTT PI^M I J]VKP WN  ]VLMZ XZQKMLZQ[S[<IQTZQ[STM^MZIOMIVLTQY]QLQ\a are the lessons learned from the historical NQVIVKQIT NIQT]ZM[º 5WV\ZW[[ [IQL (Continued bottom of page 2)

DAY 1: Sunday September 8 2013 | MONTE CARLO TODAY | 1

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SUNDAY

News

08.09.13

No news is good news in reinsurance: SCOR CEO (Continued from top of page 1) NWZI\ZIV[Q\QWVQVQV\MZM[\ZI\M[TM^MT[_MJMTQM^M will occur. No news is usually good news in reinsurance.â&#x20AC;? ?Q\PQV \PQ[ UMI[]ZML IXXZWIKP 3M[[TMZ PI[QLMV\QĂ&#x2026;ML[M^MZITOWWLZMI[WV[PMJMTQM^M[ ;+7:KIVW]\XMZNWZUQ\[KWUXM\Q\WZ[ .QZ[\PMJMTQM^M[\PMTW_QV\MZM[\ZI\MMV^QZWVUMV\_PQKPPI[\ZW]JTML\PMQVL][\ZaNWZ[W TWVOVW__QTT[WWVMVLIVL\PI\;+7:Q[_MTT positioned to take full advantage of this. ;+7: PI[ PM [Ia[ QV^M[\ML I TW\ WN  MNNWZ\ QV ]VLMZ[\IVLQVO PW_ Q\ KIV JM[\ UIVIOM \PQ[ transition from very low interest rates to more VWZUIT TM^MT[ 7VM WN  \PM \PQVO[ ;+7: PI[ LWVM NWZ M`IUXTM Q[ ZMJITIVKM Q\[ QV^M[\UMV\ portfolio with an emphasis on shorter duration QV^M[\UMV\[[WUM\PQVO\PI\Q[IT[WZMĂ&#x2020;MK\Q^MWN  \PM UISM]X WN  U]KP WN  Q\[ TQIJQTQ\a XWZ\NWTQW <PQ[_QTTITTW_Q\\WY]QKSTaZMITQOVQ\[XWZ\NWTQW as interest rates improve to maximise the upside. Kesslerâ&#x20AC;&#x2122;s second area of focusâ&#x20AC;&#x201D;and reason for optimismâ&#x20AC;&#x201D;is the growth of the companyâ&#x20AC;&#x2122;s XZWXMZ\aKI[]IT\aJ][QVM[[0MM`XMK\[\PQ[J][QVM[[\WOMVMZI\MI^MZaPMIT\PaKWUJQVMLZI\QW WN  ! \W ! XMZKMV\ _Q\PQV \PM PWZQbWV WN  \PM VM_XTIV0MIOIQVJIKS[]X\PQ[M`XMK\I\QWV .QZ[\ PM JMTQM^M[ \PM QVĂ&#x2020;]` WN  IT\MZVI\Q^M KIXIKQ\a_QTT[\IJQTQ[MIVLZM\ZMI\[TQOP\TaQVTQVM with rises in interest rates. He is convinced that the wider low yield environment is the primary driver for this money seeking alternative investments and, as this changes, so will the sentiment of these investors â&#x20AC;&#x201C; something that would

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ITTW_ZMQV[]ZMZ[\WUW^MJIKSQV\W\PQ[[XIKM *]\\PMJQOOMZ[W]ZKMWN OZW_\PNWZ;+7:Âź[ XZWXMZ\aKI[]IT\a JWWS _QTT KWUM \PZW]OP I simple gradual expansion of its lines with existQVOKTQMV\[0M[Ia[ILZQ^MZWN \PQ[_QTTJMIVQVcreased sensitivity to counterparty risk among OTWJITQV[]ZMZ[KWUJQVML_Q\P\PMNIK\\PI\WN  \PMJQOOM[\ZMQV[]ZMZ[UIVaPI^M\PMTW_M[\M`XW[]ZM\W;+7:

â&#x20AC;&#x153;Many of the biggest insurers have expanded rapidly in recent years. As such, they increasingly want to work with reinsurers with a truly global presence.â&#x20AC;?

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MONTE CARLO TODAY Sunday September 8, 2013

INTELLIGENT INSURERâ&#x20AC;&#x2122;S MONTE CARLO TODAY 1;8=*41;0-,*A6-?<765-,1)4151<-, :MOQ[\MZML)LLZM[["3QVOĂ&#x2026;[PMZ0W][M-TUĂ&#x2026;MTL :WIL*ZWUTMa*:4<=VQ\ML3QVOLWU <MTMXPWVM"  www.newtonmedia.co.uk ,1:-+<7:)6,8=*41;0-: 6QKPWTI[4QXQV[SQ A7=:+76<)+<;16576<-+):47 2WPV?IT[P <MTMXPWVM" !  Email: john.walsh@newtonmedia.co.uk 6QKPWTI[4QXQV[SQ <MTMXPWVM"! Email: nlipinski@newtonmedia.co.uk 8:7,=+<176)6,,-;1/6 .Q[PMZUIV+ZMI\Q^M Â?6M_\WV5MLQI4QUQ\ML)TTZQOP\[ZM[MZ^ML

š5IVa WN  \PM JQOOM[\ QV[]ZMZ[ PI^M M`XIVLML ZIXQLTa QV ZMKMV\ aMIZ[ )[ []KP \PMa increasingly want to work with reinsurers with I\Z]TaOTWJITXZM[MVKMIVLQLMITTa\PMa_IV\ \W_WZS_Q\PNM_MZZMQV[]ZMZ[7V\WXWN \PQ[ these companies are much more risk-aware when it comes to counterparty risk. š*MKI][M WN  ;+7:Âź[ PQ[\WZa XZWXWZ\QWVITTa _M _QTT WN\MV JM \PM XTIaMZ \PMa PI^M \PM least exposure to on the programme,â&#x20AC;? Kessler [IQL šAM\ _M KIV WNNMZ \PM OTWJIT [MZ^QKM IVL expertise they are looking for. That makes us a good option for them when they review their reinsurance arrangements or seek a new partVMZ ;UITTMZ XTIaMZ[ _QTT PI^M UWZM LQNĂ&#x2026;K]T\a accessing these risks.â&#x20AC;? Q

6WXIZ\WN \PQ[X]JTQKI\QWVUIaJMZMXZWL]KML stored in a retrieval system, or transmitted in any NWZUWZJaIVaUMIV[MTMK\ZQKITUMKPIVQKITXPWtocopying, recording or otherwise without the prior _ZQ\\MVXMZUQ[[QWVWN \PMX]JTQ[PMZ The views expressed in Intelligent Insurerâ&#x20AC;&#x2122;s Monte Carlo TodayIZMVW\VMKM[[IZQTa\PW[M[PIZMLJa\PMX]JTQ[PMZ 6M_\WV5MLQI4QUQ\ML?Q[PQVO\WZMĂ&#x2020;MK\\PM\Z]M nature of the market, the editor has included articles NZWUIV]UJMZWN [W]ZKM[IVL\PM^QM_[M`XZM[[MLIZM \PW[MWN \PMQVLQ^QL]ITKWV\ZQJ]\WZ[6WZM[XWV[QJQTQ\a WZTQIJQTQ\aQ[IKKMX\MLJa6M_\WV5MLQI4QUQ\MLNWZ any loss to any person, legal or physical, as a result WN IVa[\I\MUMV\NIK\WZĂ&#x2026;O]ZMKWV\IQVMLQVIntelligent Insurerâ&#x20AC;&#x2122;s Monte Carlo Today.<PQ[X]JTQKI\QWVQ[VW\I []J[\Q\]\MNWZIL^QKMWVI[XMKQĂ&#x2026;K\ZIV[IK\QWV <PMX]JTQKI\QWVWN IL^MZ\Q[MUMV\[LWM[VW\ZMXZM[MV\ MVLWZ[MUMV\Ja\PMX]JTQ[PMZ 1V\MTTQOMV\1V[]ZMZ¡1;;6!!!

Beware under-priced business in whatever form (Continued from bottom of page 1) 0M[IQLW\PMZJQO\ITSQVOXWQV\[I\\PMM^MV\ _QTT JM \PM KWV\QV]ML KWV[WTQLI\QWV _Q\PQV \PM JZWSMZIOMQVL][\ZaIVL\PMTWVOMZ\MZUZMXMZcussions of this as well as the growing regulatory challenges. He said that although delegates would likely discuss rates and terms and conditions in the market â&#x20AC;&#x153;one canâ&#x20AC;&#x2122;t and shouldnâ&#x20AC;&#x2122;t generalise IJW]\UIZSM\ZI\M[?MTWWSI\M^MZaKTQMV\IVL

â&#x20AC;&#x153;One canâ&#x20AC;&#x2122;t and shouldnâ&#x20AC;&#x2122;t generalise about market rates. We look at every client and every transaction on its own merit.â&#x20AC;?

Tad Montross, General Re

2 | MONTE CARLO TODAY | DAY 1: Sunday September 8 2013

every transaction on its own meritâ&#x20AC;?. 0M[IQLPQ[WJRMK\Q^MI\\PM:MVLMb>W][ is simply to meet with clients and prospects to JM\\MZ]VLMZ[\IVL\PMQZKPITTMVOM[IVLVMML[ š[W_MKIVJMZM[XWV[Q^MQV\PM]XKWUQVOZMnewals.â&#x20AC;? )VLPM[IQL\PMKWUXIVaQ[QVVWP]ZZa\W make headlines, as long as it keeps doing what it does well. š?M_QTTJMUISQVOIJQOIVVW]VKMUMV\QV 5WV\M +IZTW" \PI\ _M PI^M VW M`Q\ [\ZI\MOaÂş he joked. â&#x20AC;&#x153;In all seriousness, we are committed \W\PMZMQV[]ZIVKMJ][QVM[[?MLWVÂź\KWUXM\M _Q\P W]Z KTQMV\[ IVL _MÂźTT JM IZW]VL \W UISM good on the promises, the commitments we UISM1\UIaVW\UISMIVaPMILTQVM[\WLIaJ]\ \PI\Âź[Ă&#x2026;VM_Q\P][ÂşQ

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Wells Fargo Collateral Trust Services is internationally recognized for outstanding products and services Ć&#x152;É&#x201E;É&#x201E;Ć&#x2020;Ć&#x2020;É&#x201E; ).0-) É&#x201E;-0./É&#x201E; (É&#x201E;*!É&#x201E;/# É&#x201E; -É&#x201E; (2013) Ć&#x152;É&#x201E;É&#x201E;*''/ -'É&#x201E; -1$ É&#x201E;-*1$ -É&#x201E;*!É&#x201E;/# É&#x201E; -É&#x201E; (2012, 2013) Ć&#x152;É&#x201E;É&#x201E;'*'É&#x201E; ./É&#x201E;)&É&#x201E;!*-É&#x201E; ).0-) É&#x201E;-0./.É&#x201E; (2011, 2012)

+/$1 É&#x201E;Ć&#x152;É&#x201E; 0/$' É&#x201E;Ć&#x152;É&#x201E; $).0-) É&#x201E;Ć&#x152;É&#x201E; É&#x201E;Ć&#x152;É&#x201E;Ć&#x2020; Ć&#x2020;É&#x201E;+/$1 Ć&#x2020; Ć&#x2020;É&#x201E; 0/$' É&#x201E;Ć&#x152;É&#x201E;0- /4É&#x201E;Ć&#x152;É&#x201E; -(*)/É&#x201E; "0'/*-4 Wells Fargo Corporate Trust Services does not provide legal or tax accounting services for its customers. Customers should always consult their own professional tax and legal advisors in connection with any effort to qualify a particular transaction for favorable treatment under applicable tax laws and regulations. Wells Fargo Corporate Trust Services is a division of Wells Fargo Bank, N.A. and may refer business to its affiliates, including Wells Fargo Bank International and Wells Fargo Securities International Limited. Wells Fargo Bank International is regulated by the Central Bank of Ireland and both Wells Fargo Bank, N.A. and Wells Fargo Securities International Limited are authorized and regulated by the UKâ&#x20AC;&#x2122;s Financial Services Authority under the Financial Services and Markets Act 2000. Š 2013 Wells Fargo Bank, N.A. All rights reserved. MC-6412


SUNDAY

News

08.09.13

11 top tips for managing your rating agencies Litmus Analysis, the consultancy that specialises in helping COMPANIESĂ?BETTERĂ?UNDERSTANDĂ?THEIRĂ?lNANCIALĂ?STRENGTHĂ?ANDĂ? ratings, gives 11 top tips on how reinsurers can better manage their relationships with rating agencies.

1

Make sure the agency capital model is completed properly <PQ[[MMU[WJ^QW][J]\_MÂź^M[MMVIV]UJMZ of examples where there were errors that weakened the result and/or key strengths that could PI^MJMMVPQOPTQOP\MLJ]\_MZMUQ[[ML

2

Prospective earnings are crucial, but you have to make a compelling case for them *W\P)5*M[\IVL;8PI^MIT_Ia[[MMVXZWspective earnings as fundamental to the rating IVL;8Âź[ZMKMV\KZQ\MZQIKPIVOMUISM[\PQ[M^MV UWZMM`XTQKQ\1\Âź[XIZ\TaIJW]\aW]Z\ZIKSZMKWZL J]\IT[W\PMÂť_PaÂźWN PW_aW]ZUIZSM\XW[Q\QWV competitive advantages and underwriting controls will deliver the results you are forecasting.

3

They are NOT asking you to diversify! It might seem this way and they might even appear to suggest it (although they shouldnâ&#x20AC;&#x2122;t as \PI\_W]TLKWV[\Q\]\MÂťIL^QKMÂźJ]\\PQ[Q[R][\I confusion of the analytical point. Namely, concentration risk is a fact of life for specialists and aW] OM\ XMVITQ[ML NWZ Q\ QN  \PI\ Q[ aW]Z XZWĂ&#x2026;TM <PI\Q[VW\Âť[WT^MLÂźJaÂťLQ^MZ[QĂ&#x2026;KI\QWVNWZLQ^MZ-

[QĂ&#x2026;KI\QWVÂź[ [ISMÂź ]VTM[[ Q\Âź[ QV\W IZMI[ aW] KIV demonstrate you really understand well and \PI\aW]_QTTVW\JMÂťJ]aQVOJ][QVM[[ÂźJW\PWN  _PQKP\PMa_QTTJMKWVKMZVMLIJW]\

4

Reserve adequacy is always a concern Itâ&#x20AC;&#x2122;s the hardest thing for a third-party IVITa[\ \W JM KWVĂ&#x2026;LMV\ IJW]\ 1N  aW] \PQVS you over-reserve, provide as much supporting M^QLMVKM[]KKQVK\Ta \PI\aW]KIV1N aW]PI^M ]VLMZZM[MZ^MLQV\PMXI[\\PMaIZMJW]VL\WJM worried, so address it.

5

Remember, ratings are decided by committees (not individuals or computers) The analysts you meet are your communica\QWVKPIVVMT\W\PMUMUJMZ[WN \PMKWUUQ\\MM 6W\ WVTa LW aW] VMML \PMU \W JMTQM^M QV \PM [\ZMVO\PWN aW]ZXZWĂ&#x2026;TM\PMaVMML\WJMIJTM\W effectively explain this to a committee whose RWJQ[¡QVXIZ\¡\WJM[KMX\QKIT

6

Why donâ&#x20AC;&#x2122;t they believe us? +TIQUQVON]\]ZM[]KKM[[M^MVOQ^MVI[\ZWVO \ZIKSZMKWZLQ[VW\MVW]OP1\UQOP\[MMUOITT-

ing that they wonâ&#x20AC;&#x2122;t just accept what you say at NIKM^IT]MJ]\\PI\Âź[\PMQZRWJ/Q^MIVITa\QKIT ZMI[WV[NWZJMTQM^QVOQVaW]Z[\ZMVO\P[UIZSM\ [PIZM LQ[\ZQJ]\QWV KPIVVMT [\ZMVO\P[ ]VLMZwriting controls, specialist knowledge, strength WN KTQMV\ZMTI\QWV[M\KIVLLI\IZM[MIZKP\PI\ support them.

7

Donâ&#x20AC;&#x2122;t look to rely on â&#x20AC;&#x2DC;commentsâ&#x20AC;&#x2122; you make at the management meeting If itâ&#x20AC;&#x2122;s important, put it in the presentation. -^MV QN  \PMa IKK]ZI\MTa VW\M ITT aW]Z ^MZJIT KWUUMV\[ IVL ZM[XWV[M[ \W Y]M[\QWV[ \PMa UIa VW\ ZMUMUJMZ \PM M`IK\ ZI\QWVITM <PI\ will not work with the committee.

8

Understand the point of each part of the criteria and address all their questions -IKPXIZ\WN \PMZI\QVOKZQ\MZQIPI[IXWQV\\W Q\ QV \MZU[ WN  LMKQLQVO \PM ZI\QVO <PM JM\\MZ M^MZaJWLa QV^WT^ML ]VLMZ[\IVL[ _PI\ \PI\ Q[ the more likely you are to successfully explain your strengths in that context and/or address any perceived weaknesses.

9

Make sure the message is clear and memorable 1N aW]JMTQM^MaW]PI^MIOWWL[\WZa\W\MTTWVIVa part of the analysis put the message in the slide PMILQVO LWVÂź\ TMI^M Q\ I[ \PM Ă&#x2026;VIT J]TTM\ I\ \PM JW\\WU WN  \PM [TQLM  1N  [WUM\PQVO Q[ []JRMK\Q^M ][MUMUWZIJTMIVMKLW\M[\WQTT][\ZI\M\PMXWQV\

10

Graphs and diagrams are good but donâ&#x20AC;&#x2122;t be too clever, or cute, with them =[M OZIXP[ \W KTMIZTa [PW_ \PM QUXWZ\IV\ trend, fact or process. But donâ&#x20AC;&#x2122;t make them too complex or the power of the point will get lost. )VLLWVÂź\JMÂťK]\MÂź_Q\P\PMaMIZ[aW][MTMK\WZ \PMÂťI`Q[ÂźWN IOZIXP<PMa_QTTXZWJIJTa[XW\Q\ WZ_WZ[M\PMa_QTTUQ[[Q\J]\[WUMJWLaI\\PM KWUUQ\\MM_QTTVW\QKM

11

ERM is a strategic process 5ISM[]ZMaW]KW^MZaW]Z-:5N]VK\QWV [XMKQĂ&#x2026;KITTa J]\ IT[W UISM []ZM Q\Âź[ KTMIZ PW_Q\QVNWZU[[\ZI\MOaLMZQ^M[NZWU\PMJWIZL IVLQ[MUJMLLMLIKZW[[aW]ZWXMZI\QWV[Q Litmus Analysis is staffed by ex-senior rating agency analysts.

Stuart Shipperlee

Peter Hughes

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Visit www.litmusanalysis.com or litmusanalysisblog.wordpress.com

DAY 1: Sunday September 8 2013 | MONTE CARLO TODAY | 5


SUNDAY

Insight Investment – a BNY Mellon company

08.09.13

Junk bonds may not be garbage after all As the current low yield environment is expected to persist, insurers have been SEEKINGÏWAYSÏTOÏGENERATEÏHIGHERÏYIELDS ÏANDÏSUB INVESTMENTÏGRADEÏBONDSÏMAYÏlTÏ the bill, says Simon Richards. Background 0Q[\WZQKITTaLM[XQ\MQV^M[\QVOI[QOVQÅKIV\XZWXWZ\QWVWN \PMQZJITIVKM[PMM\[QV\WÅ`MLQVKWUMI[[M\[ insurance companies focused almost solely on govMZVUMV\ JWVL[ IVL QV^M[\UMV\ OZILM KWZXWZI\M LMJ\ 5WZM ZMKMV\Ta I[ LMZQ^I\Q^M[ PI^M UILM Q\ easier to hedge the overseas interest rate and currency exposures arising from investing in overseas JWVL[QV[]ZMZ[PI^MJMMVIJTM\WLQ^MZ[QNa\PMQZM`posure into different issuers, sectors and economies. However, BBB- remains a psychological cut off point for the majority of insurers and even \PW[M\PI\LQLXMZUQ\M`XW[]ZM\W[]JQV^M[\UMV\ OZILM¸»R]VS¼WZ»PQOPaQMTL¼¸JWVL[_Q\PQV\PMQZ XWZ\NWTQW[\MVLML\WZM[\ZQK\\PW[MPWTLQVO[\WJWVL[ \PI\ PIL ZMKMV\Ta JMMV LW_VOZILML NZWU QV^M[\UMV\OZILM[\I\][\PM[WKITTML»NITTMVIVOMT[¼

How risky are high yield bonds? .WZ I N]VL UIVIOMZ _Q\P [\ZWVO JW\\WU]X IVITa\QKIT [SQTT[ \PM XZMLQK\IJQTQ\a WN  KI[P ÆW_[ IVL QVKWUM OMVMZI\ML Ja I J][QVM[[ IZM MI[QMZ \W I[sess over a shorter time period. This is particularly \PMKI[MNWZPQOPaQMTLQ[[]M[_PMZM\PMZMUIaJM KWV[QLMZIJTM]VKMZ\IQV\aJMaWVL\PMVM`\\W  UWV\P[1VLMML\PMJQOOM[\XZW\MK\QWVIOIQV[\\PM KZMLQ\ZQ[SWN PWTLQVOIVaLMJ\Q[\PM[PWZ\L]ZI\QWVIVLKWZZM[XWVLQVOPQOP^Q[QJQTQ\aWN \PMQ[[]MZ¼[ IJQTQ\a\WUMM\\PMKW]XWVXIaUMV\[IVLZM\]ZV\PM principal as scheduled. This increased certainty of outcome over shorter durations is a critical risk mitigant when considering high yield opportunities. .]Z\PMZ\PMIXXZWIKP][MLJaZI\QVOIOMV-

Figure 1: Mismatch between rating and maturity Probability of default

higher

from reinvesting at higher yields, rather than locking in low rates for an extended period.

The search for yield

Simon Richards

“Insurers seeking increased risk-adjusted returns should be prepared to look beyond their usual comfort zones to take advantage of market opportunities in a number of areas.” KQM[ Q[ \W I[[QOV I ZI\QVO JI[ML WV \PM _PWTM issuer curve regardless of maturity, so the ac\]ITMKWVWUQKZQ[SQVPMZMV\QVI[]JQV^M[\UMV\ OZILM KWZXWZI\M JWVL _Q\P [Ia R][\ I aMIZ \W UI\]ZQ\a UIa JM UI\MZQITTa TW_MZ \PIV \PM credit rating would suggest. This creates opXWZ\]VQ\QM[NWZ\PW[MIJTM\W\ISMIL^IV\IOMWN  \PQ[ IVWUITa _PMZMJa aQMTL[ IZM PQOPMZ \PIV ZMY]QZML \W R][\QNa \PM MNNMK\Q^M LMNI]T\ IVL QTTQY]QLQ\aZQ[S[<PQ[Q[QTT][\ZI\MLQV.QO]ZM For insurers seeking attractive risk-adjusted returns, the recommended approach is therefore to seek out short-dated positions where certainty Q[OZMI\M[\J]\_PMZMI\\ZIK\Q^M[XZMIL[KIV[\QTT JMIKPQM^ML

yield

Current economic conditions Targeted maturity

Probability of default

lower 1

2 3 4 Years to maturity

Source: Insight investment. For illustrative purposes only.

5

In addition to seeking higher returns in the [PWZ\ \MZU QV[]ZMZ[ IZM IT[W KWVKMZVML IJW]\ the potential for future interest rate rises and hence the adverse impact this would have on \PMQZÅ`MLQVKWUMXWZ\NWTQW[)N]Z\PMZIL^IV\IOMWN [PWZ\LI\MLPQOPaQMTLJWVL[Q[\PI\I[ positions are constantly maturing there is po\MV\QITTa[KWXMW^MZ\PMTWVOMZ\MZU\WJMVMÅ\

6 | MONTE CARLO TODAY | DAY 1: Sunday September 8 2013

)[\PMK]ZZMV\TW_aQMTLMV^QZWVUMV\Q[M`XMK\ML \WXMZ[Q[\QV[]ZMZ[PI^MJMMV[MMSQVO_Ia[\WOMVMZI\M PQOPMZ aQMTL[ \W MVIJTM \PMU \W UMM\ \PM promises made to shareholders and policyholders. ?PQTMQ\Q[OMVMZITTaMI[a\WQVKZMI[MM`XMK\MLZM\]ZV[JaQVKZMI[QVOZQ[SNWZQV[]ZMZ[\PQ[Q[IKKWUXIVQMLJaPQOPMZZMO]TI\WZaKIXQ\ITZMY]QZMUMV\[ and potentially increased downside risk. ;WXPQ[\QKI\ML QV[]ZMZ[ IZM \PMZMNWZM [MMSQVO QVvestments which offer increased yields due to other NIK\WZ[ []KP I[ QTTQY]QLQ\a WZ KWUXTM`Q\a ZQ[S[ WZ QV^M[\WZ I^MZ[QWV \PI\ UIa VW\ ZMÆMK\ \PM IK\]IT MKWVWUQK[WN IVI[[M\KTI[[7N KW]Z[MQVWZLMZ\W do this they need to understand the impact of those ZQ[S[ WV \PMQZ JITIVKM [PMM\[ IVL MV[]ZM \PI\ \PMa have appointed an investment manager who has the relevant expertise in managing these types of asset. )[[M\JIKSML[MK]ZQ\QM[MUMZOQVOUIZSM\LMJ\ TWIV[][ML\WÅVIVKMKWZXWZI\MJ]aW]\[KWUUMZKQITZMITM[\I\MTMVLQVOIVLPQOPaQMTLJWVL[ITTK]ZZMV\TaÅ\QV\W\PQ[WXXWZ\]VQ\a[M\NWZQV[]ZMZ[

Conclusions Œ 1V[]ZMZ[ [MMSQVO QVKZMI[ML ZQ[SILR][\ML ZM\]ZV[[PW]TLJMXZMXIZML\WTWWSJMaWVL\PMQZ ][]ITKWUNWZ\bWVM[\W\ISMIL^IV\IOMWN UIZSM\WXXWZ\]VQ\QM[QVIV]UJMZWN IZMI[ Œ ;XMKQITQ[\ I[[M\ UIVIOMZ[ IZM TQSMTa \W JM ZMY]QZML\WPMTXUIVIOM\PMMKWVWUQKIVLZMOulatory risks that arise from new investments. ;PWZ\LI\ML PQOP aQMTL Q[ WVM []KP WXXWZ\]VQ\a for insurers considering where enhanced returns KIVJMIKPQM^ML_PQTMUIVIOQVOJW\PMKWVWUQK ZQ[SIVLZMO]TI\WZaKIXQ\ITZMY]QZMUMV\[ ?PQTMPQOPaQMTLJWVL[_QTTVM^MZIVLQVLMML [PW]TLVM^MZUISM]XI[QOVQÅKIV\XIZ\WN I\aXQcal insurer’s asset strategy, as a non-core, returnMVPIVKQVOIT\MZVI\Q^MPQOPaQMTLJWVL[QVI[PWZ\er-maturity format make a lot of sense and should have an active role in insurance portfolios. Q Simon Richards is head of insurance solutions at Insight Investment. He can be contacted at: Simon.Richards@insightinvestment.com

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08.09.13

Smaller players will increasingly use ILS 7

VM WN  \PM PW\\M[\ \WXQK[ I\ 5WV\M +IZTW \PQ[ aMIZ _QTT ]VLW]J\MLTa JM \PM OZW_QVO QVĂ&#x2020;]` WN  \PQZL XIZ\a KIXQ\IT QV\W the collateralised reinsurance market and the many challenges this presents for traditional reinsurers. <PI\ Q[ \PM ^QM_ WN  ?QTTQIU 8WTTM\\ XZM[QLMV\IVLKPQMN M`MK]\Q^MWN *T]M+IXQ\IT5IVagement, the investment management company specialising in reinsurance-linked investment XZWL]K\[_PQKPPI[IXIZ\VMZ[PQX_Q\P5WV\XMTQMZ:MIVLW_VMLJa5WV\XMTQMZ/ZW]X )VL PM IZO]M[ \PI\ \PM UW[\ QUXWZ\IV\ change occurring in this market is around the fact that smaller players are also increasingly using such markets. š)T\PW]OP UIVa WN  \PM\WX OTWJITJ]aers of catastrophe reinsurance, who typically X]ZKPI[MUWZM\PIVWVMJQTTQWVLWTTIZ[WN TQUQ\ XMZ M^MV\ PI^M JMMV \ZILQVO _Q\P IT\MZVI\Q^M markets for over a decade, we are now seeing smaller insurance groups, who in the past would not have sought collateralised protection, also considering such markets in order to reduce the credit risk in their reinsurance programmes,â&#x20AC;? he said. He says there are a couple of trends underpinning this trend: a greater desire for diversity QVKZMLQ\ZQ[SIVLINMIZWN \PMKWV[MY]MVKM[WN  unforeseen systemic risk. š)VM`XTIVI\QWVNWZ\PQ[\ZMVLQV^WT^M[\_W important lessons that risk managers learned NZWU \PM   Ă&#x2026;VIVKQIT KZQ[Q[" Ă&#x2026;Z[\ \PI\ \MV Âť)ÂźZI\MLKW]V\MZXIZ\QM[XZW^QLMIJM\\MZKZMLQ\ ZQ[S XZWĂ&#x2026;TM \PIV \_W Âť)))Âź ZI\ML KW]V\MZXIZties and, secondly, that there is the potential for systemic or contagion risk across all rated counterparties in the most extreme scenarios,â&#x20AC;? 8WTTM\\[IQL

William Pollett

â&#x20AC;&#x153;This accelerating trend leaves traditional reinsurers who lack a collateralised product ofNMZQVONWZ\PMQZKTQMV\[I\ZQ[SWN UQ[[QVO[QOVQĂ&#x2026;KIV\J][QVM[[WXXWZ\]VQ\QM[Âş He adds that a gap is emerging around the M`XMZ\Q[M KWUXIVQM[ PI^M QV \PQ[ IZMI ?PQTM large multinational insurers are already comNWZ\IJTMLMITQVOLQZMK\Ta_Q\PIT\MZVI\Q^MKIXQ\IT markets through products such as catastrophe JWVL[ 14?[ IVL KWTTI\MZITQ[ML ZMQV[]ZIVKM many of the smaller players are still uncomfortIJTM\ZILQVO_Q\PXZWL]K\[IVLKW]V\MZXIZ\QM[ with which they are unfamiliar. š<PMaIZMWN\MVKWVKMZVMLIJW]\\PMKW]Vterpartyâ&#x20AC;&#x2122;s long-term commitment to the space, an important consideration for smaller insurance companies who rely on reinsurance to enIJTM\PMU\W\ZILMNWZ_IZLNWTTW_QVOI[QOVQĂ&#x2026;KIV\KI\I[\ZWXPMM^MV\Âş8WTTM\\[IQL

š8I[\M`XMZQMVKMPI[[PW_V\PI\IT\MZVI\Q^M KIXQ\ITUIZSM\[KIVLQ[IXXMIZI[Y]QKSTaI[\PMa appear, often due to circumstances unrelated to underwriting performance, including inves\WZZMLMUX\QWV[1VILLQ\QWV\PMJI[Q[ZQ[S\PI\ index triggered instruments introduce is often ]VIKKMX\IJTM\W[UITTMZJ]aMZ[Âş 0M [Ia[ \PI\ NWZ *T]M +IXQ\IT \PM \WX  OTWJIT ZMQV[]ZIVKM J]aMZ[ IZM VW\ Q\[ XZQUIZa target. â&#x20AC;&#x153;Instead, we focus on trading with smaller insurers; typically regional companies QV \PM =; IVL W\PMZ LM^MTWXML ZMQV[]ZIVKM UIZSM\[_PW_ZQ\MJ][QVM[[QVITWKITQ[MLOMWgraphic area. š)[ \PM[M KWUXIVQM[ [MMS \W LQ^MZ[QNa \PMQZ ZMQV[]ZIVKM KZMLQ\ ZQ[S _Q\P QVLMUVQ\aJI[ML KWTTI\MZITQ[MLXZW\MK\QWV*T]M+IXQ\ITQ[IJTM\W meet this new demand while allowing them to trade with a counterparty they have known and trusted for years.â&#x20AC;? *T]M+IXQ\IT[MMS[\WLM^MTWXTWVO\MZUZMlationships with these cedants, he says, resulting QVIXWZ\NWTQW\PI\_QTTZMVM_I[QOVQĂ&#x2026;KIV\XWZ\QWVWN Q\[J][QVM[[MIKPaMIZ š)[ I [XMKQITQ[\ XZWXMZ\aKI\I[\ZWXPM ZMQV[]ZMZ 5WV\XMTQMZ Q[ KWUUQ\\ML \W \PM [XIKM and has a strong track record of paying claims XZWUX\Ta )[ XIZ\ WN  \PM 5WV\XMTQMZ /ZW]X *T]M +IXQ\IT ]VTQSM \PM UIRWZQ\a WN  KWTTI\MZITQ[MLUIZSM\[Q[[M\]X\WXZW^QLMIN]TTY]W\QVO[MZ^QKMWV\ZILQ\QWVITQVLMUVQ\aJI[MLZMQVsurance placements. š1UXWZ\IV\Ta W]Z JZWSMZ[ IVL KTQMV\[ IT[W ]VLMZ[\IVL \PI\ ÂťVW\ ITT KWTTI\MZIT Q[ KZMI\ML MY]ITTaÂź IVL ZMKWOVQ[M \PM ^IT]M WN  \PM KIXQtal against which we underwrite, such as Blue +IXQ\IT/TWJIT:MQV[]ZIVKM.]VLÂź[XMZUIVMV\ KIXQ\ITJI[M_PQKPQ[VW\[]JRMK\\WQV^M[\WZZMdemption.â&#x20AC;? Q

"RITĂ?EXPANDSĂ?NETWORKĂ?WITHĂ?"ERMUDAĂ?OFlCE

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8 | MONTE CARLO TODAY | DAY 1: Sunday September 8 2013

5I\\PM_?QT[WV+-7WN *ZQ\/TWJIT;XMKQIT\a [IQL" š7XMVQVO I JZIVKP WNĂ&#x2026;KM QV *MZU]LI _QTT MVPIVKM \PM LQ[\ZQJ]\QWV KIXIJQTQ\a WN  \PM OZW]X Ja INNWZLQVO *ZQ\ JZWILMZ IKKM[[ \W JW\P KI[]IT\a IVL XZWXMZ\a \ZMI\a J][QVM[[ These are areas in which the group already has [QOVQĂ&#x2026;KIV\M`XMZ\Q[MIVL_PMZMXZWĂ&#x2026;\IJQTQ\aPI[ JMMV[\ZWVO<PQ[Q[IVW\PMZSMa[\MXQVLM^MTWXQVO*ZQ\Âź[OTWJITWNNMZQVOÂşQ

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08.09.13

Industry well placed to handle cats T

PMQVL][\ZaQ[JM\\MZXZMXIZML\WLMIT_Q\P TIZOM KI\I[\ZWXPM[ \PIV M^MZ JMNWZM I NIK\WZ_PQKPPI[JMMVI[[Q[\MLJaKWV^MZOMVKM KIXQ\IT IKKWZLQVO \W )TI[\IQZ ;XMIZM+WTM +-7WN 24<:M š<PM IJQTQ\a WN  \PM QVL][\Za \W ZM[XWVL \W KI\I[\ZWXPM TW[[M[ PI[ JMMV XZW^ML W^MZ \PM last few years,â&#x20AC;? he said. â&#x20AC;&#x153;Just look at Hurricane ;IVLa¡Q\LQLVÂź\UISMI[]J[\IV\QITLQNNMZMVKM \WZI\QVO[M`KMX\QVXW[[QJTa[MK\WZ[WN \PMUIrine market.â&#x20AC;? The additional capital, which continues \WĂ&#x2020;WWL\PMUIZSM\PI[ZMKMQ^MLUQ`ML^QM_[ NZWU \PM QVL][\Za PW_M^MZ IVL I[ ;XMIZM +WTM M`XTIQV[ Q\ Q[ VW\ [WUM\PQVO \PI\ [PW]TL JM[QUXTaJZIVLMLI[OWWLWZJIL š1N aW][\MXJIKSNZWUQ\1\PQVS\PI\Q\Âź[I good thing that there are a lot of people who are willing to take societyâ&#x20AC;&#x2122;s risk transfer into the capital markets, however, there are those who will not view it positively.â&#x20AC;? He adds: â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a continuation of what has JMMVJMNWZMJ]\I\IVIKKMTMZI\QVOXIKM-^MZa-

[WUM Q\Âź[ I LQUQV]\QWV WN  XZWĂ&#x2026;\IJQTQ\a [W Q\Âź[ PIZL\W[Ia_PM\PMZ\PQ[Q[[QUXTaIOWWLWZJIL thing. â&#x20AC;&#x153;There is now a complicated interaction JM\_MMVLQNNMZMV\XIZ\[WN \PMKIXQ\ITUIZSM\[ with different appetites going through different vehicles, which are going into different portfolios of risk transference. š?PQT[\ 1ÂźU []ZM \PMZM _QTT JM KMZ\IQV MTMments to all of that, if there was a major loss or a series of major catastrophe losses, there might JM [WUM _PW UQOP\ JM []ZXZQ[ML WZ KPIVOM their strategies as a result.â&#x20AC;? Q

Alastair Speare-Cole WVMPI[ILQNNMZMV\^QM_IJW]\\PMVM_IJ]Vdance of alternative capital, and for some its welcome capacity, for some itâ&#x20AC;&#x2122;s a threat and for

â&#x20AC;&#x153;There is now a complicated interaction between different parts of the capital markets, with different appetites going through different vehicles, which are going into different portfolios of risk transference.â&#x20AC;?

Broker team from JLT Re cycle to Monte Carlo

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LIaZQLMNZWU4QUM;\ZMM\WV)]O][\ ZMIKPQVO+I[QVW;Y]IZMWV;MX\MUJMZ š?MPI^MKaKTML UQTM[[WIVI^MZIOMWN  !UQTM[XMZLIaÂş[IQL*QOO[š1\_I[I\W]OP ride in places with some very challenging hill KTQUJQVO¡\PM\W\IT^MZ\QKITMTM^I\QWVOIQVNWZ \PM RW]ZVMa Q[ SU _PQKP Q[ \PM MY]Q^ITMV\ WN  ZMIKPQVO \PM [\ZI\W[XPMZM WZ KTQUJQVO \PM PMQOP\WN 5\-^MZM[\WVMIVLIPITN \QUM[ 8T][ on day seven we tackled the famous 21 hairXQVJMVL[WN )TXM,Âź0]Mb_PQKPQ[ SUQV TMVO\PIVLIVI^MZIOMQVKTQVMWN !XMZKMV\Âş )TZMILa []ZXI[[QVO \PMQZ N]VLZIQ[QVO \IZOM\ XZQWZ \W [M\\QVO WNN \PM OZW]X PI[ JMMV W^MZ_PMTUMLJa\PM[]XXWZ\ â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a great thing that theyâ&#x20AC;&#x2122;re doing â&#x20AC;&#x201C; and KMZ\IQVTa[I^M[WVIQZNIZM[Âş[IQL)TI[\IQZ;XMIZM +WTM+-7WN 24<:Mš?MÂźZM^MZaOZI\MN]TNWZ everyone that has supported our team.â&#x20AC;? <PM \MIU [XMV\ JM\_MMV [M^MV IVL MQOP\ hours a day cycling and faced a variety of terrain. š1\_I[IJMI]\QN]TZQLMIVL_MÂź^MPIL[WUM OZMI\ _MI\PMZ \WW [IQL *QOO[ š7V LIa \PZMM we ended with a fun race against the sunset to the hotel.â&#x20AC;? Q

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08.09.13

)NmUXĂ?OFĂ?CAPACITYĂ?ISĂ?AĂ?WORRYĂ?FORĂ?PRICING )

UMZ )PUML \PM KPQMN  M`MK]\Q^M WNĂ&#x2026;KMZ WN  )TTQIVb :M [Ia[ \PM MNNMK\ \PM ZMKMV\ QVĂ&#x2020;]` WN  IT\MZVI\Q^M KIXIKQ\a Q[ PI^QVO WV XZQKQVO_QTTJMIJQOQ[[]MIVLLQ[K][[QWVXWQV\ QV5WV\M+IZTW\PQ[aMIZ0M[MM[\PMQ[[]M_Q\P \PM XMZ[XMK\Q^M WN  JW\P I J]aMZ IVL [MTTMZ WN  reinsurance and he says the impact it is having on pricing worries him. š<PMKWV[\IV\KIXQ\ITQVĂ&#x2020;W_NZWUQV^M[\WZ[ into the reinsurance sector has changed the TIVL[KIXM KWV[QLMZIJTa <PM IJ]VLIV\ I^IQTIJQTQ\aWN KIXIKQ\aQV\PMUIZSM\\PZW]OP\PM[M ILLQ\QWVIT [W]ZKM[ QVKZMI[M[ KWUXM\Q\QWV JMtween investors and reinsurers and has a downwards impact on pricing,â&#x20AC;? he said. š)TTQIVb:MQ[VW\WVTaIXZW^QLMZJ]\IT[WI TIZOMJ]aMZWN ZMQV[]ZIVKM)T\PW]OP\PMPQOP capacity and pricing competition might seem NI^W]ZIJTMNZWUIJ]aQVOXMZ[XMK\Q^MQ\JMIZ[ the danger that certain risks get covered at inILMY]I\M ZI\M[ *]\ Q\ Q[ QV M^MZaJWLaÂź[ QV\MZest that the overall insurance and reinsurance [a[\MU ZMUIQV[ [\IJTM IVL [][\IQVIJTM <PQ[ ZMY]QZM[ZQ[SILMY]I\MXZQKQVO¸JMaWVL\PMLanamics of supply and demand.â&#x20AC;? )PUMLI\)TTQIVb[Ia[Q\Q[LQNĂ&#x2026;K]T\\WXZMLQK\_PI\[WZ\WN aMIZQ\_QTTJM[QVKMaW]WVTa VMML WVM JQO [\WZU PQ\\QVO I ^]TVMZIJTM IZMI NWZ TW[[M[ \W M[KITI\M Y]QKSTa 0M JMTQM^M[ \PM QVL][\Za _QTT ZM[XWVL _Q\P Ă&#x2020;M`QJQTQ\a IVL WXportunism, as it has following previous losses, J]\_Q\P\PMKIXQ\IT[QUXTaMV\MZQVO\PMUIZSM\ in a different way. š1N  \PMZM _MZM \W JM []J[\IV\QIT TW[[M[ _M would expect sidecar capacity to enter the IZMVIÂşPM[Ia[š5WZMWXXWZ\]VQ[\QKQV^M[\WZ[ _W]TL [MMS \W JMVMĂ&#x2026;\ NZWU KIXQ\IT [PWZ\IOM[ IVL MV\MZ \PM UIZSM\ ^MZa Y]QKSTa ][QVO [QLMcars as a vehicle. š5IVaZMQV[]ZIVKMKWUXIVQM[PI^MI[QLMcar on the shelf and are ready to offer their

â&#x20AC;&#x153;The Rendez-Vous sets the stage for the reinsurance renewals every year. Monte Carlo will absolutely remain relevant to the industry for the foreseeable future.â&#x20AC;?

Amer Ahmed capacity if the market turns. It is also pretty [\ZIQOP\NWZ_IZL\WQV^M[\QVIVM[\IJTQ[PMLN]VL \PM[MLIa[IVL_Q\PTQ[\MLN]VL[VW_JMQVOWNNMZMLQ\Q[ZMI[WVIJTM\WI[[]UM\PI\\PM[MTQ[\ML N]VL[_QTTJMIJTM\WY]QKSTaKZMI\MIVM_KTI[[ with attractive risk-return characteristics for an opportunistic investor. The presence of an es\IJTQ[PML14;UIZSM\_Q\PTWVOMZ\MZUQV^M[\WZ PWZQbWV[ XZWJIJTa LIUXMV[ \PM KaKTQKIT MNNMK\ of large events these days.â&#x20AC;? ;XMISQVO IPMIL WN  \PM :MVLMb>W][ PM IT[W UIQV\IQV[ \PI\ \PM M^MV\ _QTT JM I[ J][a ^QJZIV\IVLZMTM^IV\I[M^MZQV š.WZUWZM\PIVaMIZ[5WV\M+IZTWPI[ JMMV\PMXTIKMNWZLQ[K][[QWV[JM\_MMVXTIaMZ[ QVW]ZQVL][\Za)T\PW]OP\PMZMIZMIT[WPQOPTa [QOVQĂ&#x2026;KIV\QVL][\ZaM^MV\[QVW\PMZZMOQWV[\PM 5WV\M +IZTW ZMQV[]ZIVKM KWVNMZMVKM PI[ I\tendees from everywhere in the world,â&#x20AC;? he said.

The reason for that is geographical and \QUMZMTI\ML <PM \QUQVO¸MIZTa ;MX\MUJMZ¸ Q[QLMITJMKI][M\PI\Âź[_PMVLQ[K][[QWV[NWZ\PM 2IV]IZaZMVM_IT[[\IZ\_Q\P\PMĂ&#x2026;Z[\KWV^MZ[I\QWV[JM\_MMVKTQMV\[IVLZMQV[]ZMZ[ š<PM 5WV\M +IZTW :MVLMb>W][ PI[ LM^MTWXML I JZIVL W^MZ \PM aMIZ[ <PQ[ JZIVL [\IVL[ NWZ XZWJIJTa \PM PQOPM[\ IKK]U]TI\QWV of industry players in one place, providing conLMV[ML ZMQV[]ZIVKM J][QVM[[ QV\MTTQOMVKM \WX TM^MT\PW]OP\TMILMZ[PQXIVLĂ&#x2026;Z[\PIVLUIZSM\ VM_[ITTQVWVM_MMSMIZTaQV;MX\MUJMZ8T][ there is the convenience of meeting, in a short time, within close reach, clients and reinsurers _PWIZMW\PMZ_Q[M[XZMILIZW]VL\PMOTWJM š<PM :MVLMb>W][ [M\[ \PM [\IOM NWZ \PM ZMQV[]ZIVKMZMVM_IT[M^MZaaMIZ5WV\M+IZTW _QTTIJ[WT]\MTaZMUIQVZMTM^IV\\W\PMQVL][\Za NWZ\PMNWZM[MMIJTMN]\]ZMÂşQ

%NDURANCEĂ?EXPANDSĂ?CAPABILITIESĂ?INĂ?!SIAĂ?0ACIlC

-

VL]ZIVKM ;XMKQIT\a 0WTLQVO[ PI[ M`XIVLMLQ\[;QVOIXWZMJI[ML)[QI8IKQĂ&#x2026;K ZMQV[]ZIVKM J][QVM[[ ]VQ\ \W QVKT]LM I TWKIT OTWJIT KI\I[\ZWXPM ZMQV[]ZIVKM \MIU _Q\P I focus on the regionâ&#x20AC;&#x2122;s markets. 8I\ZQKS )M[KPJIKPMZ _PW PMIL[ \PM KWUXIVaÂź[)[QI8IKQĂ&#x2026;KZMQV[]ZIVKMWXMZI\QWV[_QTT

ZMXWZ\\W-VL]ZIVKMÂź[+-7WN OTWJITZMQV[]Zance Jerome Faure. )\\PMMVLWN -VL]ZIVKM[MVQWZ^QKM XZM[QLMV\IVLPMILWN )[QI8IKQĂ&#x2026;KXZWXMZ\aKI\I[\ZWXPMZMQV[]ZIVKM[:MVM4IUMZ_QTT\ZIV[NMZ\W;QVOIXWZM 0M _QTT JM []XXWZ\ML Ja I TWKIT XZWXMZ\a

10 | MONTE CARLO TODAY | DAY 1: Sunday September 8 2013

catastrophe underwriting team, and report to ;\MXPMVAW]VOM`MK]\Q^M^QKMXZM[QLMV\KPQMN  ]VLMZ_ZQ\QVOWNĂ&#x2026;KMZIVLPMILWN OTWJITKI\I[trophe reinsurance. Faure said of the expansion: â&#x20AC;&#x153;Bolstering our ]VLMZ_ZQ\QVOZM[W]ZKM[QV\PQ[ZMOQWVZMĂ&#x2020;MK\[W]Z LMMXKWUUQ\UMV\\W\PM)[QI8IKQĂ&#x2026;KZMOQWVQ

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INNOVATION doing what no one else imagined

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SUNDAY

News

08.09.13

QBE Europe to provide capacity to Cobalt 4

WVLWV PI[ \PM XW\MV\QIT \W JMKWUM \PM PMIZ\ WN  XZQV\\PI\KW]TLJMILWX\MLJa\PM4WVLWVUIZSM\ºPM[IQL \PM 1[TIUQK ÅVIVKQIT UIZSM\ IKKWZLQVO \W :QKPIZL Bishop added: “I would like to let you all know that whilst *Q[PWX KPQMN  M`MK]\Q^M WN  +WJIT\ =VLMZ_ZQ\QVO IV VW\Y]Q\MKWUXTM\MLNWZ\PQ[M^MV\_MIZM[PWZ\Ta_MPWXM QV[]ZMZ[XMKQÅKITTaNWZUML\WXZW^QLM;PIZQIPKWUXTQIV\ \W[MK]ZM\PMKIXIKQ\aWN IVW\PMZUIRWZOTWJITQV[]ZMZ?M QV[]ZIVKM[XMISQVOI\\PMTI]VKPQV4WVLWV IZMK]ZZMV\TaQVIL^IVKMLLQ[K][[QWV[_Q\P9*--]ZWXM\W ;PIZQIP XZQVKQXTM[ XZWPQJQ\ \PM ][M WN  \ZILQ\QWVIT QV[]ZXZW^QLM][_Q\PILLQ\QWVITKIXIKQ\aNWZJW\PW]ZXZWXMZ\aIVL IVKMI[Q\]\QTQ[M[I[XMK\[WN ][]ZaOIUJTQVOIVL]VKMZ\IQV\a KWV[\Z]K\QWVXZWXW[Q\QWV[K]ZZMV\TaXZW^QLMLWVTaJa@41V)[UIRWZ1[TIUQKQV[\Q\]\QWV[KWZXWZI\QWV[IVLQV^M[\WZ[PI^M []ZIVKMI[_MTTI[QVILLQ\QWV]VQY]MTaWNNMZQVO][[]XXWZ\ [W]OP\\WM`XIVLQV\MZVI\QWVITTa\PMaPI^MJMMVNWZKML\W][M for a new casualty facility. Naturally we will let everyone know \ZILQ\QWVITQV[]ZIVKMXZWL]K\[W]\WN VMKM[[Q\aJ]\PI^MJMMV when our discussions are complete. [MMSQVOI;PIZQIPKWUXTQIV\IT\MZVI\Q^M ¹<PQ[ VM_ KIXIKQ\a _QTT JZQVO W]Z XZWXMZ\a NIKQTQ\a \W )KKM[[ \W \PM VMKM[[IZa QV[]ZIVKM KIXIKQ\a _Q\P \PM ZM[\IVLI\ UQTTQWVIVLW]Z+WV[\Z]K\QWVNIKQTQ\a\W  Y]QZML[MK]ZQ\aPI[JMMVI[QOVQÅKIV\P]ZLTMPW_M^MZ[WUMUQTTQWV?PQT[\WN KW]Z[M\PM[MIZMPMILTQVMÅO]ZM[\PM[M Richard Bishop, \PQVO+WJIT\QV\MVL[\WW^MZKWUM ZMXZM[MV\I[QOVQÅKIV\VMMLTMUW^MZNWZ\PM1[TIUQKQV[]ZCobalt Underwriting *Q[PWXIT[W[IQL+WJIT\Q[QVIL^IVKMLLQ[K][[QWV[_Q\P ance sector.” two major underwriters to provide capacity alongside current capacity pro0MILLML"¹1KIVIT[W[\I\M\PI\_Q\PQV\PMVM`\NM__MMS[_M[PW]TLJM ^QLMZ@4 IJTM\WIVVW]VKM\PM[]XXWZ\WN I\PQZLUIZSM\\WW]ZXIVMT?PQT[\1KIVVW\ The underwriters will provide capacity for construction, property and ca- VIUMVIUM[\PQ[UIZSM\_QTTVW\WVTa[QOVQÅKIV\TaQVKZMI[MW]ZM`Q[\QVONIKQTQsualty products and Bishop said the aim was to expand the range of classes \QM[J]\_QTTIT[WILLUIZQVMKIZOWIVLWV[PWZMIVLWNN[PWZMMVMZOaKIXIKQ\a ]VLMZ_ZQ\\MV\WQVKT]LM\PMTQSM[WN UIZQVMKIZOWIVLIKKM[[4TWaL¼[KIXIKQ\a to the mix.” Q +WJIT\_QTT]VLMZ_ZQ\MUMLQ]U\WTIZOMKWUUMZKQIT_PWTM[ITMZQ[S[\PZW]OP JZWSMZ[IVLVW\LQZMK\XMZ[WVITWZKWUUMZKQITTQVM[J][QVM[[ 0M[IQL\PI\[QVKM1[TIUQK[KPWTIZ[PILJMMVMVKW]ZIOQVOMNNWZ\[\W ÅVLI[WT]\QWV\W\PMTIKSWN KIXIKQ\aNWZ\PMXZW^Q[QWVWN ;PIZQIPKWUXTIQV\ insurance. ¹7VMWN W]ZNW]VLQVOXZQVKQXTM[IVLWVMWN W]ZÅZ[\UIRWZIKPQM^MUMV\[ _I[\PI\+WJIT\[PW]TLJMZM[XWV[QJTMNWZ\PMKZMI\QWVWN VM_[\IVLIZL[NWZ\PM ;PIZQIPKWUXTQIV\QV[]ZIVKMIVLZMQV[]ZIVKMQVL][\ZaJaLM^MTWXQVOIJT]M-

Asbestos to hit reinsurers

-

]ZWXMIVZMQV[]ZMZ[KW]TLJIZM\PMJZ]V\WN PQSM[QVI[JM[\W[KW[\[IVL ZM[MZ^M[I[I[JM[\W[TW[[M[[WIZJa JQTTQWVNWZ=;QV[]ZMZ[IKKWZLQVO \WIZMXWZ\Ja:]`TMa:M[MIZKPXIZ\WN Z]VWNN [XMKQITQ[\:]`TMa>MV\]ZM[ 1VQ\[ÅN\PZM[MIZKPX]JTQKI\QWV:]`TMa:M[MIZKPPI[QLMV\QÅML\PM[QOVQNQKIV\ QVKZMI[M Ja  JQTTQWV QV \PM M`XMK\ML ]T\QUI\M KW[\ WN  LMITQVO _Q\P I[JM[\W[KTIQU[I[I[W]ZKMWN OZW_QVO]VKMZ\IQV\aNWZ-]ZWXMIVZMQV[]ZMZ[ <PMZM[MIZKPKWVKT]LML\PI\_PQTM\PMI^MZIOM=;I[JM[\W[[]Z^Q^ITZI\QWWN  -]ZWXMIVZMQV[]ZMZ[ZMUIQV[PMIT\PaIVLKWV[Q[\MV\_Q\PXZM^QW][aMIZ[\PM KPITTMVOM[ NIKQVO =; QV[]ZMZ[ KW]TL JMKWUM I XZWJTMU NWZ \PMQZ -]ZWXMIV counterparts, particularly reinsurers. <PQ[]VKMZ\IQV\aKWUM[IOIQV[\IJIKSOZW]VLWN UW]V\QVOXZM[[]ZMNZWU QV^M[\WZ[IVLZMO]TI\WZ[NWZQV[]ZMZ[\WLMTQ^MZM^MZOZMI\MZKIXQ\ITMNÅKQMVKa <PMZM[MIZKPKWVKT]LM[\PI\\PMLMTIaQV;WT^MVKa11¼[QV\ZWL]K\QWV]V\QT XZW^QLM[IVWXXWZ\]VQ\aNWZZMQV[]ZMZ[\WNWK][WVLMITQVO_Q\PXZWJTMU[ []KPI[=;I[JM[\W[VW_\PMZMJaITTW_QVOZM[MZ^M[\WJMZMTMI[MLIVLKIXQ\IT ZMITTWKI\ML\WUWZMXZWÅ\IJTM]VLMZ_ZQ\QVOIK\Q^Q\QM[ ¹?PQTMQ\Q[PMIZ\MVQVO\W[MM\PI\\PMI[JM[\W[ZM[MZ^M[WN -]ZWXMIVQV[]ZMZ[ KWV\QV]M\WJMZWJ][\\PMXZM[[]ZMNZWUIZQ[QVOI[JM[\W[]T\QUI\MIVL\PMKW[\[ I[[WKQI\ML_Q\PPWTLQVOWV\W\PM[MTQIJQTQ\QM[IZMQVKZMI[QVOTa]VI\\ZIK\Q^M\W QV^M[\WZ[º[IQL2WPV?QV\MZ+-7WN :]`TMa>MV\]ZM[Q

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"UIFOTt-POEPOt/JDPTJB

10 years doing work that matters

MATRIX

insurance & reinsurance brokers SA

DAY 1: Sunday September 8 2013 | MONTE CARLO TODAY | 13


SUNDAY

News

08.09.13

Reinsurers must work with governments /

TWJITZMQV[]ZMZ[U][\MVLMI^W]Z\W_WZS more closely with governments and OW^MZVUMV\ JWLQM[ \W XWWT M`XMZ\Q[M IVL ร…VL _Ia[ WN  JM\\MZ PIVLTQVO VI\]ZIT LQ[I[\MZ[ IVL catastrophes. <PI\ Q[ \PM ^QM_ WN  )[PWS 3]UIZ :Wa KPIQZUIV IVL UIVIOQVO LQZMK\WZ WN  /1+ :M the Indian reinsurer that is rapidly spreading its ZMIKPIKZW[[)[QIIVL\PM5QLLTM-I[\ ยน:MQV[]ZMZ[[PW]TL_WZSQV^MZaKTW[MI[[WKQI\QWV_Q\POW^MZVUMV\[\WKZMI\MJM\\MZ[WT]\QWV[ NWZ \PM XZWJTMU WN  VI\]ZIT KI\I[\ZWXPM[ which are increasing in regularity and ferocity,โ€ he said.

โ€œUsually, the relief packages provided by the government and other authorities in the wake of such tragedies do not encourage people to act proactively and prepare for such unexpected events.โ€ ยน<WLIaM^MVQV1VLQIPIZLTaXMZKMV\ WN  \PM LQ[I[\MZ KW[\[ IZM QV[]ZML?M PI^M I XZIK\QKMWN XW[\LQ[I[\MZZMTQMN IVLZMPIJQTQ\I-

tion efforts and this takes up a major chunk of the government resources allocated to the management of natural catastrophes. ThereNWZMQV[]ZIVKMKIVJMIVM`KMTTMV\ZQ[S\ZIV[fer vehicle, especially in the case of natural catastrophes.โ€ 0M ILL[ \PI\ Q\ Q[ VW\ WVTa IJW]\ QV[]ZQVO \PM[MZQ[S[/W^MZVUMV\[KIVIT[WPMTXMV[]ZM the development of an infrastructure that reduces overall risks and which in turn can reL]KMLIUIOM[[]J[\IV\QITTa โ€œThis will also help us in the insurance QVL][\Za \W XZW^QLM I ZQ[S JI[ML XZQKQVO \PI\ _W]TLJMUWZMINNWZLIJTM\WW]ZK][\WUMZ[IVL thus also achieve the target of increasing insurIVKMXMVM\ZI\QWVยบ[IQL:Wa ยน+WTTIJWZI\QWVQ[\PMSMa_WZLPMZM=[]ITTa\PMZMTQMN XIKSIOM[XZW^QLMLJa\PMOW^ernment and other authorities in the wake of such tragedies do not encourage people to act proactively and prepare for such unexpected events. In fact such arrangements lull them into complacency and deter them from adoptQVOZQ[SKWV\ZWTUMI[]ZM[IVLJ]aQVOILMY]I\M risk covers. โ€œHence, the insurance industry and the govMZVUMV\[ KIV KWTTIJWZI\M \W KZMI\M I_IZMVM[[ IJW]\[]KPM^MV\[[\MX[\WJM\ISMV\WUQ\QOI\M

losses if and when such an event occurs and promote a culture of insurance to help spread \PMZQ[S<PQ[_W]TLJM\PMJM[\[\ZI\MOa\W[\Ia ahead of catastrophic events if and when they WKK]Zยบ[IQL:WaQ

Ashok Kumar Roy

Bermuda set to become ILS global leader

-

`XMZ\[M[\QUI\M\PMOTWJIT1V[]ZIVKM4QVSML ;MK]ZQ\QM[ 14; UIZSM\ KW]TL LW]JTM WZ M^MV\ZQXTMQV\PMVM`\ร…^M\W\MVaMIZ[IVL\PI\ Bermuda is set to take pole position in the market QV\PMM[\IJTQ[PUMV\IVLTQ[\QVOWN \PM[M^MPQKTM[ <PI\Q[\PM^QM_WN 14;*MZU]LII\MIUWN  OTWJITXTIaMZ[_PWIZMUI`QUQ[QVO\PMXW\MV\QIT of the alternative reinsurance, convergence and insurance-linked securitisation marketplace. It says a large part of this lucrative market is comQVO\W\PMQ[TIVLT]ZMLJa\PMSVW_TMLOM\PI\Q\ Q[ITZMILaIVM[\IJTQ[PMLZMQV[]ZIVKMUIZSM\PI[ great service providers and the right legislation QVXTIKM\WUISM[M\\QVO]X14;Y]QKSIVLMI[a Investors, cedents and others involved see great growth opportunity which is resulting in QVKZMI[ML TM^MT[ WN  IK\Q^Q\a QV 14; IVL PI[ I positive knockon effect on the economy of Bermuda, the organisation said. Bermudaโ€™s market has already grown from

I [\IVLQVO [\IZ\ QV ! _PMV TMOQ[TI\QWV _I[ JZW]OP\ QV \W UISM Q\ MI[QMZ \W [M\ ]X [XMKQIT X]ZXW[M^MPQKTM[_PQKPIZM][ML\W[M\]X14; 1VL][\Za 4W[[ ?IZZIV\QM[ IVL [QLM KIZ[ <PM *MZU]LI ;\WKS -`KPIVOM VW_ PI[ I ZMKWZL

JQTTQWVWN 14;TQ[\ML^MPQKTM[Iร…O]ZM_PQKP PI[R]UXMLNZWUR][\ UQTTQWVQV ยน5IVaQV\PMQVL][\ZaJMTQM^M\PI\\PM\QUQVOQ[ VW_NWZ14;IVL\PI\[WUM\PQVOWN I\QXXQVOXWQV\ PI[JMMVZMIKPML1\Q[_Q\P\PQ[JIKSLZWX\PI\\PM 14; *MZU]LI +WV^MZOMVKM  6M\_WZSQVO -^MV\_I[JWZVยบ[IQL2I[WV+IZVMPMILWN 14; I\385/QV*MZU]LIIVLIV14;*MZU]LI+WV^MZOMVKMWZOIVQ[QVOKWUUQ\\MMUMUJMZ ยน)XXZW`QUI\MTaXMZKMV\WN 14;UIZSM\KI\ JWVLQ[[]IVKM[QV_MZMQV*MZU]LIUISing this inaugural event a fantastic opportunity for key players in the industry to gather and for VM_QV^M[\WZ[\WTMIZVUWZMIJW]\\PMWXXWZ\]VQ\QM[I^IQTIJTM\W\PMUIVL\WOM\QV^WT^MLยบ

14 | MONTE CARLO TODAY | DAY 1: Sunday September 8 2013

14; *MZU]LI ITWVO _Q\P Q\[ UMUJMZ[ MVgaged in capital markets and insurance, are PW[\QVO +WV^MZOMVKM  \ISQVO XTIKM QV 0IUQT\WV*MZU]LIWV6W^MUJMZIVL <PQ[ Q[ IV QV^Q\I\QWVWVTa M^MV\ JZQVOQVO \Wgether Bermudaโ€™s capital market leaders and insurance innovators. ยน*MZU]LI Q[ _PMZM \PM 14; QV^M[\WZ[ IVL [XWV[WZ[IZMIVLVW__MIZM[MMQVOJ][QVM[[M[ moving from other jurisdictions to Bermuda. +WV^MZOMVKM  _QTT JZQVO \PM[M OZW]X[ together in a way no other event can,โ€ said *ZIL )LLMZTMa QV[]ZIVKM XIZ\VMZ I\ TI_ ร…ZU )XXTMJaIVL14;*MZU]LI+WV^MZOMVKM WZOIVQ[QVOKWUUQ\\MMUMUJMZ ยน+WV^MZOMVKM  IT[W _QTT JZQVO QV[QOP\ on why Bermuda has the longevity and infra[\Z]K\]ZMVMMLMLQ[IVI\]ZITร…\NWZ14;IVLPI[ XW\MV\QIT\WJ]QTLI[VW_JITTMNNMK\_MIZM[MMing in the market.โ€ Q

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No.1 asset manager in Europe (1)

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Amundi Insurance Solutions Amundi is a reference point and long-standing asset manager for insurance clients, having served the industry for over 25 years. Managing over â&#x201A;Ź300 bn of assets for insurance clients, Amundi ranks among the leading asset managers for the insurance industry, with more than 150 external clients in 20 countries(2).

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(1) Total assets under management - Source IPE â&#x20AC;&#x153;Top 400 asset managers active in the European marketplaceâ&#x20AC;? published in June 2013, data as at 31 December 2012. Interviews of asset management companies on their assets as at endDecember 2012 (open-end funds, dedicated funds, mandates). (2) Amundi Group data as at 31 March 2013. This material is solely for the attention of â&#x20AC;&#x153;Institutionalâ&#x20AC;? investors only, as defined as the case may be in each local regulations. It is not for any person, qualified investor or not, from any country or jurisdiction which laws or regulations would prohibit such material, nor for â&#x20AC;&#x153;US Personsâ&#x20AC;?. This material does not constitute an offer to buy or a solicitation to sell, nor does it constitute public advertising for any product, financial service or investment advice. Amundi S.A. French joint stock company with a registered capital of â&#x201A;Ź596 262 615 - Portfolio Manager regulated by AMF under number GP 04000036 - Registered office: 90, boulevard Pasteur - 75015 Paris - FRANCE - 437 574 452 RCS Paris - www.amundi.com - Photo credits: Getty images. |

Director, Insurance Supervision, BMA Reporting to the Managing Director of Supervision, the Director will direct and manage a 60 strong team of individuals in meeting the departmentâ&#x20AC;&#x2122;s goals and objectives by way of effective plans and schedules that support the Strategic Plan and overall objectives of the Bermuda Monetary Authority. ROLE RESPONSIBILITIES TO INCLUDE: Â&#x2021;  Â&#x2021;   Â&#x2021;  Â&#x2021;  Â&#x2021;  Â&#x2021;  Â&#x2021; Â&#x2021; 

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7KHUHPXQHUDWLRQIRUWKLVSRVLWLRQLVFRPSHWLWLYHDQGZLOOGHSHQGRQTXDOLÂżFDWLRQVDQGH[SHULHQFH 7KHFORVLQJGDWHIRUDSSOLFDWLRQVLVWK6HSWHPEHU2013.$OODSSOLFDQWVZLOOEHDFNQRZOHGJHGXSRQUHFHLSW2QFHWKHFORVLQJGDWHKDVSDVVHG DQGDOODSSOLFDWLRQVKDYHEHHQUHYLHZHGDSSOLFDQWVZLOOEHFRQWDFWHGDJDLQ Please apply by letter or e-mail with an accompanying CV to: &DUROLQH:ULJKW+DQVRQ*UHHQ1103DUN6WUHHW/RQGRQW1K6NX 7HO+44(0)2072557940 )D[+44(0)2073551436 (PDLOFZULJKW#KDQVRQJUHHQFRXN :HEVLWHZZZKDQVRQJUHHQFRXN


SUNDAY

News

08.09.13

AHJ chair ponders 40 years of change T

he reinsurance industry has changed for \PM JM\\MZ QV ZMKMV\ aMIZ[ QV I _Ia \PI\ should smooth out the sharp peaks and troughs in pricing and – yet fundamentally remains an industry founded on uncertainty. <PI\ Q[ PW_ I ZMÆMK\Q^M 0]OP 8ZQKM \PM chairman of independent privately-owned JZWSMZ )T_MV 0W]OP 2WPV[WV LM[KZQJM[ \PM industry he has spent a career working in. His KWUXIVa KMTMJZI\M[  aMIZ[ QV J][QVM[[ \PQ[ aMIZ IVL PM [Ia[ WVM WN  \PM ZMI[WV[ \PM ÅZU PI[MVL]ZMLNWZ[WTWVOQ[JMKI][MWN Q\[IJQTQ\a to change with the times. The most fundamental changes have come around the use of risk models and the level of IVITa[Q[][MLJaITTKWUXIVQM[VW_·XZIK\QKM[ \PI\LQLVW\M`Q[\aMIZ[IOW\W\PMLM\ZQUMV\ of the industry. ¹<PM[M\PQVO[LQLVW\M`Q[\JIKS\PMVIVL\PM QVL][\Za [WUM\QUM[ []NNMZML I[ I ZM[]T\º 8ZQKM said. “It is a much more professional market now IVL_MPI^MPIL\WILIX\IVLKPIVOM_Q\PQ\?M have invested heavily in our own analytics and software over the years to put us on a par with the _IaJ][QVM[[Q[VW_LWVMQV\PQ[QVL][\Zaº 0M JMTQM^M[ IVW\PMZ KWV[MY]MVKM WN  \PQ[ KI][MLJaI_QLMZ][MWN ZQ[SUWLMT[IVLOZMI\MZ ZMO]TI\WZa W^MZ[QOP\ PI[ JMMV I [UWW\PMZ cycle in the market with companies less willing IVLTM[[IJTM\WK]\ZI\M[\WKPI[MUIZSM\[PIZM ¹<PQVO[ IZM [UWW\PMZ J]\ QV \PQ[ J][QVM[[ you never know what is around the corner,” he [IQL¹?PMVQ\KWUM[\WUIZSM\PIVOQVOM^MV\[ \PMaIZMVW\WZQW][TaLQNÅK]T\\WXZMLQK\º 0MJMTQM^M[\PI\I[IXZQ^I\MTaW_VMLKWUXIVa )T_MV 0W]OP 2WPV[WV PI[ JMMV JM\\MZ IJTM\WILIX\\W\PM[MKPIVOM[1\PI[JMMVIJTM \W UISM QUXWZ\IV\ [\ZI\MOQK LMKQ[QWV[ Y]QKSTa _PQTM ZMUIQVQVO NWK][ML WV Q\[ SMa WJRMK\Q^M[ and values.

UQ[[QWVJI[MLQVL][\ZaIVLW]ZZM^MV]M[PI^M risen and fallen over the years with the pricing trends in the wider market. But the lack of external shareholders makes it easy to handle that and take a very long-term view.” 0MILL[\PI\ITIKSWN J]ZMI]KZIKaIZW]VL \PMLMKQ[QWVUISQVOXZWKM[[QV\PMJZWSMZPI[ IT[WITTW_MLQ\\WIK\NI[\IVLMNÅKQMV\Ta_PMV KPIVOM PI[ JMMV VMMLML ¹<PI\ PI[ JMMV I LMÅVQ\MIL^IV\IOMW^MZ\PMaMIZ[ºPM[IQL

“We are in a commission based industry and our revenues have risen and fallen over the years with the pricing trends in the wider market. But the lack of external shareholders makes it easy to handle that and take a very long-term view.”

Hugh Price, Alwen Hough Johnson ¹?PQTM \PM ZMQV[]ZIVKM QVL][\Za PI[ changed dramatically, we remain very client WZQMV\I\ML · I Y]ITQ\a \PI\ OWM[ JIKS \W W]Z NW]VLMZ[º 8ZQKM [IQL ¹7]Z [PIZMPWTLMZ[ IZM IT[W W]Z [\INN  IVL \PI\ PI[ JMMV ^MZa PMTXN]T through challenging times and times of change. ¹?MPI^MVM^MZJMMVQVKTQVML\WKPI[M]VXZWÅ\IJTMJ][QVM[[I[IZM[]T\?MIZMQVIKWU-

1V\MZU[WN \PM5WV\M+IZTW:MVLMb>W][ 8ZQKM[Ia[\PMJQO\ITSQVOXWQV\_QTTJM\PMUIOnitude of the growth of the collateralised market in recent years. ¹1\[[KITMPI[JMMVI[]ZXZQ[M\W[WUMXMWXTMºPM[IQL¹<PMZM_QTTJMITW\WN LQ[K][[QWV IZW]VL _PI\ J]aMZ[ [PW]TL JM LWQVO IVL \PM way this capacity is slowly working its way into the primary market. ¹4WVO\MZU\PI\LaVIUQKLWM[KPIVOM\PM UISM\*]\I[IJZWSMZaW]R][\PI^M\WILR][\ and take the capacity wherever it is and in _PI\M^MZNWZU_PQTM[QUXTaLWQVO_PI\Q[JM[\ for the client.” )T_MV 0W]OP 2WPV[WV Q[ XTIVVQVO I [\INN  XIZ\a\WKMTMJZI\MQ\[aMIZ[QVJ][QVM[[QVTI\M ;MX\MUJMZQ

Chubb to offer cyber security at Lloyd’s

+

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OZW_V aMIZWVaMIZ QV \PM =; 4MOIT ZMY]QZMUMV\[ PI^M JMMV \PM UIRWZ LZQ^MZ \PMZM J]\ QVKZMI[QVO ZMO]TI\WZa IVL TMOIT ZMY]QZMUMV\[ QV-]ZWXMIZMQVKZMI[QVOLMUIVL[NWZIKKW]V\IJQTQ\a[KZ]\QVaIVLZM[XWV[QJQTQ\aNWZXMZ[WVIT IVLKWVÅLMV\QITLI\I +WUUMV\QVO WV \PM ILLQ\QWV WN  \PM KaJMZ WNNMZQVO 3M^QV ,WKPMZ\a +P]JJ   )K\Q^M

16 | MONTE CARLO TODAY | DAY 1: Sunday September 8 2013

=VLMZ_ZQ\MZ [IQL" ¹1V\ZWL]KQVO I KaJMZ [MK]ZQ\a XZWL]K\ Q[ IV QUXWZ\IV\[\IOMQV \PM ;aVLQKI\M¼[LM^MTWXUMV\?Q\P\PQ[TI\M[\ILLQ\QWV to our product range we are drawing on the exXMZ\Q[M+P]JJPI[LM^MTWXMLQV\PQ[[XPMZMIVL as demand for the product grows in the coming aMIZ[ +P]JJ   _QTT JM _MTT XW[Q\QWVML \W UMM\\PMVMML[WN KTQMV\[IVLJZWSMZ[ITQSMºQ

www.intelligentinsurer.com | www.bermudareinsurancemagazine.com


SUNDAY

Interview: Arndt Gossmann, DARAG

08.09.13

Legacy outâ&#x20AC;&#x201D;investors in !SĂ?MOREĂ?INSURERSĂ?TRANSFERĂ?LEGACYĂ?BUSINESSĂ?TOĂ?SPECIALISEDĂ?INSURERSĂ?ANDĂ?lNANCIALĂ? investors look to run-off as a new investment, Arndt Gossmann, CEO of DARAG explains why the sector is booming. DARAG raised â&#x201A;Ź60 million earlier in the year. Why is this? ;QVKM!_MPI^MKWUXTM\ML\ZIV[IK\QWV[ I[[]UQVO Ă&#x201A; UQTTQWV WN  QVIK\Q^M TQIJQTQ\QM[ which happened faster and was more than we QVQ\QITTaM`XMK\ML)\\PM[IUM\QUM_MJMOIV this year with a solid pipeline of potential transIK\QWV[¸\PMZMNWZM_MVMMLML\WJZQVONWZ_IZL the increase of capital that we had originally [KPML]TMLNWZ .WZ W]Z KTQMV\[¸QV[]ZMZ[ \PI\ TQUJMZ ]X \PMQZ TQIJQTQ\a [\Z]K\]ZM \ZIV[NMZZQVO TMOIKa¸ reputation is as important as the terms of the \ZIV[IK\QWV?MPIVLTM\PQ[KWVKMZVI[_MWNNMZ ZMTQMN QV\WI[WTQLJITIVKM[PMM\WN IN]TTaZMO]TI\MLIVLN]TTaTQKMV[MLQV[]ZMZQV/MZUIVa7V I^WT]V\IZaJI[Q[_MKWUUQ\\WI[WT^MVKaTM^MT WN !XMZKMV\7]ZKTQMV\[[PW]TLIVLKIVM`pect that we have the capital to hand whenever we conclude a transaction.

â&#x20AC;&#x153;Whenever the risk premium of a run-off transaction is a fair remuneration for the release of capital, it makes perfect sense to externalise the legacy.â&#x20AC;?

Has the money been used yet? ?MPI^M[QOVML\PZMM[UITTMZ\ZIV[IK\QWV[[WNIZ and we expect three more to come this year. In \W\IT _M PI^M \PM IUJQ\QW][ \IZOM\ \W QVKZMI[M W]ZTQIJQTQ\QM[]VLMZUIVIOMUMV\JaĂ&#x201A;UQTTQWV _PQKP Q[ I TW\ J]\ VW\ MVW]OP \W Âť][MÂź I \W\ITKIXQ\ITJI[MWN UWZM\PIVĂ&#x201A; UQTTQWV ;QVKM ,):)/ IVVW]VKML \PM KIXQ\IT QVKZMI[M\_WKWUXM\Q\WZ[PI^MNWTTW_ML"+I\ITQVI IVL:9)ZM\PMaWVTaNWTTW_QVOaW]ZM`IUple or is run-off now an attractive investment proposition? The capital measures happened within two months and I expected others to follow. The seY]MVKMQ[KWQVKQLMV\IT\PM\QUQVOQ[VW\.WZUM it is no surprise that most run-off consolidators _Q\VM[[I[QOVQĂ&#x2026;KIV\[PQN\QVLMUIVLNWZĂ&#x2026;VITQ\a ,WVÂź\ NWZOM\ \PM KWV\QVMV\IT -]ZWXMIV TMOIKa volume is immense and the interest from insurMZ[Q[VW\I[LQ[KZMM\I[Q\_I[JMNWZM

Arndt Gossmann

WN Z]VWNN UIaJMPQOPJ]\Q\Q[^MZaXZMLQK\IJTM The most appealing attraction, however, is the correlation of an investment in non-live run-off _Q\P IVa W\PMZ I[[M\ KTI[[M[" bMZW 0MVKM Z]V off investments are outperforming from the moment they are at market interest. <PMJMVMĂ&#x2026;\NWZQV[]ZMZ[Q[IZMTMI[MWN KWUplexity and a release of capital. Independent NZWU\PMTQ^MLI\MWN ;WT^MVKa11\PMZMQ[VWIZgument that can justify allocated capital to closed J][QVM[[QV[\MILWN ][QVOQ\NWZIK\Q^MJ][QVM[[WZ ZM\]ZVQVO Q\ \W \PM [PIZMPWTLMZ[ ;W _PMVM^MZ the risk premium of a run-off transaction is a fair remuneration for the release of capital, it makes perfect sense to externalise the legacy.

Why is run-off attractive for investors ANDĂ?BENElCIALĂ?FORĂ?INSURERSĂ?

Have you seen an increase in companies wanting to transfer their inactive business?

)VQV^M[\UMV\QVMY]Q\a\PI\JIKS[TMOIKaJ][QVM[[WNNMZ[I[\IJTMIVLTWVO\MZUZM\]ZVXZWĂ&#x2026;TM 5IZOQV[IZMZMTMI[MLW^MZ\QUMIVL\PM^WTI\QTQ\a

?M [MM I [\ZWVO TM^MT WN  QV\MZM[\ IKZW[[ -]ZWXM The dedicated run-off units in larger and mid[QbMLOZW]X[UWVQ\WZIVLUIVIOMLMILTQIJQTQ\QM[

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IVLIZM[\I\MWN \PMIZ\#\PMĂ&#x2026;VLQVO[NZWU\PM[M OZW]X[IZMN]Z\PMZNWZ\QĂ&#x2026;MLJa\PM+.71\Q[KTMIZ \PI\\PMLMLQKI\MLKIXQ\ITMNĂ&#x2026;KQMVKa\MIU[_PW[M UQ[[QWVQ\Q[\WĂ&#x2026;VLIVL[WT^MIVaQVIXXZWXZQI\M use of capital, have started their mission.

Is this being driven by Solvency II? <PM QV[]ZIVKM QVL][\Za Q[ VW\ LZQ^MV Ja ;WT^MVKa11;WT^MVKa11Q[IZMO]TI\WZaNZIUM_WZS If a framework would drive an industry the industry is dead. It is however fair to say that ;WT^MVKa 11 [\QU]TI\M[ \PM QVL][\Za¸IVL \PM \ZIV[NMZWN Z]VWNN Q[WVTaWVMWN UIVaMNĂ&#x2026;KQMV\ strategies. )[]Z^MaJa\PM1V[\Q\]\MWN 1V[]ZIVKM-KWVWUQK[I\\PM=VQ^MZ[Q\aWN ;\/ITTMVKWVKT]LM[ \PI\ W^MZITT ;_Q[[ QV[]ZMZ[ IZM IPMIL QV \PM management of run-off portfolios compared \W QV[]ZMZ[ QV -= KW]V\ZQM[ <PM M`XTIVI\QWV Q[[QUXTM"1V;_Q\bMZTIVL\PMMY]Q^ITMV\WN ;WT^MVKa 11 \PM ;_Q[[ ;WT^MVKa <M[\ Q[ ITZMILa implemented. Q

DAY 1: Sunday September 8 2013 | MONTE CARLO TODAY | 17


SUNDAY

0ROlLEĂ?')#Ă?2E

08.09.13

GIC Re: spreading its wings beyond India As his company spreads it wings and expands beyond its roots in India, Ashok Kumar Roy, chairman and managing director of GIC Re, discusses the OPPORTUNITIESĂ?HEĂ?SEESĂ?FORĂ?BOTHĂ?HISĂ?OWNĂ?lRMĂ?ANDĂ?FORĂ?GLOBALĂ?PLAYERSĂ?TARGETINGĂ?)NDIA The company has backed the creation of a reinsurance hub in Indiaâ&#x20AC;&#x201D;why do you feel this is needed? India has immense untapped potential in the area of insurance penetration. To exploit this TI\MV\XW\MV\QIT_MVMML\WOQ^MIUI[[Q^MJWW[\ to the insurance infrastructure in the country. ?MVMMLIVMVWZUW][IUW]V\WN KIXQ\ITM`XMZ\Q[M JM\\MZ ]VLMZ_ZQ\QVO XZIK\QKM[ IVL IT[W \MKPVQKITSVW_PW_?MVMMLIKI\ITa[\\WSQKS start this entire process. <PQ[ Q[ PIXXMVQVO J]\ Q\ VMML[ \W PIXXMV on a much larger scale and a much faster pace. <PQ[_QTTJMIKKMTMZI\MLQN _MIZMIJTM\WOM\\PM JM[\ WN  \PM OTWJIT QV[]ZIVKM QVL][\Za \W KWUM IVL [M\ ]X JI[M PMZM <WLIa /1+ :M Q[ UW^QVOJMaWVL\PM1VLQIV[PWZM[IVL_M_MTKWUM W\PMZ[ PMZM 1\ _QTT OQ^M I JWW[\ \W \PM W^MZITT growth of the sector. India has the infrastructure to form a rein[]ZIVKMP]J1\Q[IVIKKMX\MLNIK\VW_\PI\_M have much to offer the international insurance community: a strong and just judiciary, a young and prosperous middle class and well educated \MKPVQKITTaY]ITQĂ&#x2026;MLXMWXTM

As GIC Re spreads its wings into new markets what have been your successes so far and what markets might you target next? ?MIZMUW^QVOJMaWVLW]Z[PWZM[IVL\WJMOQV with we are looking at our immediate neighJW]ZPWWL IVL KTW[M XZW`QUQ\a 1V[]ZIVKM Q[ I KZW[[JWZLMZJ][QVM[[\PI\VMML[\WUW^MIKZW[[ OMWOZIXPQM[ NWZ \PM ^MZa [QUXTM WJRMK\Q^M WN  IKPQM^QVO\PM[XZMILWN ZQ[S7]Z[\ZI\MOaPI[ JMMV^MZaKTMIZQV\PQ[ZMOIZL <WLIa ITUW[\ ITT )[QIV KW]V\ZQM[ PI^M I low insurance penetration. They are of course MUMZOQVO MKWVWUQM[ IVL I\\ZIK\QVO OTWJIT I\\MV\QWV IVL MKWVWUQK LM^MTWXUMV\ J]\ \PM insurance sector is still to achieve a standing of its own in most of these countries. It needs expertise in all respects to achieve growth and KWV\ZQJ]\M\W\PI\KW]V\ZaÂź[W^MZITTXZWOZM[[ ;W_PQTM_MKWV\ZQJ]\M\W\PMQZXZWOZM[[_M IT[WM`XIVLW]ZJI[M)VL_MPI^MJMMVZMI-

region that is attracting international investment and leading players in various sectors. <PQ[XZWUW\M[KWVĂ&#x2026;LMVKMQV][IVLI[MV[MWN  LMXMVLIJQTQ\a LM^MTWX[ )TT \PM[M [MK\WZ[ VMML insurance and insurance in an emerging marSM\[]KPI[1VLQIVMML[IKZMLQ\IJTMZMQV[]ZIVKM support. *MQVO IV M[\IJTQ[PML IVL \Z][\ML XTIaMZ QV \PMQVL][\Za_M_QTTOZW_\WW?Q\PIJQTTQWV XWX]TI\QWV IVL I aW]VO LMUWOZIXPQK XZWĂ&#x2026;TM \PMZMQ[\ZMUMVLW][[KWXMNWZZM\IQTJ][QVM[[I[ _MTT :MQV[]ZMZ[ _Q\P LMMX XWKSM\[ _QTT JM ZMY]QZML\WUMM\KIXQ\ITZMY]QZMUMV\[

What are the key challenges facing the company at the moment?

Ashok Kumar Roy

[WVIJTa[]KKM[[N]TQV\PQ[ZMOIZL?MIZMTMILMZ[ of the majority of the reinsurance programmes QVUW[\WN \PM;)):+KW]V\ZQM[5QLLTM-I[\ IVL)NZQKI /1+:MQ[IZM[XMK\MLWZOIVQ[I\QWVQV\PM[M ZMOQWV[IVLIVM[\IJTQ[PMLJZIVLVIUM,]ZQVO the course of the next year we plan to strengthen our presence further in countries like Nepal, *IVOTILM[PIVL;ZQ4IVSI?MIZMIT[WTWWSQVO I\XW[[QJQTQ\QM[QV;W]\P)NZQKI?MIZMITZMILa present in Bhutan in a joint venture reinsurance company.

!SĂ?THEĂ?INmUENCEĂ?OFĂ?THEĂ?)NDIANĂ?ECONOMYĂ? in the world grows, what will that mean for its reinsurance sector? Today, the temporary slowdown notwithstanding, the Indian economy has very strong funLIUMV\IT[)UI[[Q^MQV^M[\UMV\QVQVNZI[\Z]Kture is already in place and much more is on \PM KIZL[ ?M PI^M I OZW_QVO XZW_M[[ QV \PM

18 | MONTE CARLO TODAY | DAY 1: Sunday September 8 2013

In the Indian market, the mandatory cessions of 20 percent have come down over the years \W  XMZKMV\ VW_ <PM QVL][\Za \PI\ _I[ KWVtinuously on the upswing over the last 12 years is showing a slowing down. Hence, to not only maintain our top line at the current standards J]\\WIKPQM^MOZW_\P\WW_W]TLJMW]ZOZMI\M[\KPITTMVOMQV\PM[PWZ\\MZU)VLWN KW]Z[M \PQ[_W]TLPI^M\WKWUM_Q\PIÂťVWKWUXZWUQ[M WV\PMJW\\WUTQVMÂźKI^MI\)[1[IQLMIZTQMZ\PM ZQOP\ XZQKQVO _QTT JM \PM LQNNMZMV\QI\WZ QV \PQ[ regard.

How important are international reinsurance conferences such as Monte Carlo to you? *W\P 5WV\M +IZTW IVL *ILMV*ILMV NMI\]ZM I[XMZUIVMV\M^MV\[\WJMI\\MVLMLQVW]ZKITMVLIZ<PMaPMTX][UMM\W]ZJ][QVM[[XIZ\VMZ[ and exchange notes which then largely helps us QVNWZU]TI\QVOW]ZW_VJ][QVM[[[\ZI\MOaNWZ\PM January 1 renewals which are around the corner. Baden Baden, which falls later, is an excellent place to set the tone of the renewals as \PMLI\IIVL\PMĂ&#x2026;O]ZM[[\IZ\JMQVOKZa[\ITTQ[ML _Q\P\PZMMY]IZ\MZ[PI^QVOMTIX[ML6MMLTM[[\W add, the cementing of old and the creation of VM_ZMTI\QWV[PQX[ITUW[\QVM^Q\IJTaPIXXMV[QV \PM[M KWVNMZMVKM[ IVL Q[ KWV[MY]MV\Ta TWWSML NWZ_IZL \W Ja \PM QV[]ZIVKM ZMQV[]ZIVKM IVL JZWSMZNZI\MZVQ\aQ

www.intelligentinsurer.com | www.bermudareinsurancemagazine.com


SUNDAY

Barclays

08.09.13

Heading for a soft market Carl Boulton, head of insurance from the Non-Bank Financial Institutions team at Barclays, gives his views on what he sees as the big talking points at this yearâ&#x20AC;&#x2122;s Rendez-Vous.

I

V\PM=3W]ZQV[]ZIVKMJ][QVM[[KWV\QV]M[ to perform strongly, consisting of a wellM[\IJTQ[PMLXWZ\NWTQWWN KTQMV\[IVLIK\Q^Q\a)[ []KP\W[]XXWZ\W]ZOZW_\PIUJQ\QWV[W]ZQV\MZVI\QWVIT[\ZI\MOaQ[XIZIUW]V\?MÂź^M[MMVI TW\WN W]Z6WZ\P)UMZQKIVKTQMV\[M`XZM[[KWVKMZV IJW]\ JIVS KW]V\MZXIZ\a ZQ[S M`XW[]ZM [W _MÂź^M LM^MTWXML _PI\ aW] KW]TL LM[KZQJM I[ I ÂťP]J IVL [XWSMÂź UWLMT XZW^QLQVO \PW[M 6WZ\P)UMZQKIVKTQMV\[_Q\PI-]ZWXMIVKI[P management proposition, particularly focused WV KW]V\MZXIZ\a TQY]QLQ\a IVL QVKW]V\Za XIaments. +WZM\W\PQ[Q[\PMQV\MZKWVVMK\Q^Q\aWN W]ZQV\MZVI\QWVIT\MIU[IVL_MÂź^MJMMV[XMVLQVO\PM TI[\aMIZJ]QTLQVOW]\W]ZXZWXW[Q\QWVQV.ZIVKM ;XIQVIVL8WZ\]OIT4WWSQVONWZ_IZLW]ZVM`\ UIZSM\[WN NWK][_QTTJM1\ITaIVL/MZUIVa )NZQKI KWV\QV]M[ \W JM I SMa XZQWZQ\a NWZ Barclays and many organisations are looking at the continent with interest. The infra[\Z]K\]ZM XZWRMK\[ JMQVO ]VLMZ\ISMV QV )NZQKI ZMY]QZMIP]OMIUW]V\WN QV[]ZIVKMIVL\PM ZMQV[]ZIVKMUIZSM\Q[M`XMK\ML\WOZW_[QOVQĂ&#x2026;KIV\Ta1N aW][\IZ\\W\PQVSIJW]\\PMUIKZWMKWVWUQK[IZW]VL)NZQKIQ\[MTN¸\PM15.NWZMcasts that seven out of the 10 fastest-growing MKWVWUQM[ W^MZ \PM VM`\ Ă&#x2026;^M aMIZ[ IZM OWQVO \WJMQV)NZQKI¸\PMV_M_W]TLM`XMK\I[QOVQĂ&#x2026;KIV\ZQ[MQVLMUIVLNWZQV[]ZIVKMXZWL]K\[ certainly at a retail level, which will then need \WJMZQ[S\ZIV[NMZZMLQV\WW\PMZUIZSM\[[]KP I[ ZMQV[]ZIVKM ?Q\P WV\PMOZW]VL WXMZI\QWV[IKZW[[)NZQKI_MJMTQM^M\PI\_MIZM_MTT placed to serve corporates who are looking to invest or expand in the region. <]ZVQVO \W \MKPVWTWOa ;-8) *IZKTIa[ 8QVOQ\IVL;?1.<KWV\QV]M\WJMSMa\WXQK[ WN  KWV^MZ[I\QWV[ _Q\P W]Z KTQMV\[ <W JMOQV _Q\P\PMZM_I[IZM\QKMVKM\PI\;-8)_I[VÂź\ OWQVO \W JM MVNWZKML JMKI][M WN  ;WT^MVKa II and the delays in the implementation of \PI\ LQZMK\Q^M 1ÂźU IK\]ITTa ^MZa KWVĂ&#x2026;LMV\ \PI\;-8)Q[OWQVO\WPIXXMV#KWUXIVQM[IZM JMOQVVQVO \W OM\ ZMILa NWZ Q\ IVL IT\PW]OP \PMZMÂź[ I TW\ \PI\ \PMa VMML \W \PQVS IJW]\ XIZ\QK]TIZTa IZW]VL 5IVLI\M 5IVIOMUMV\

Carl Boulton

â&#x20AC;&#x153;The infrastructure projects being undertaken in Africa require a huge amount of insurance, and the reinsurance market is EXPECTEDĂ?TOĂ?GROWĂ?SIGNIlCANTLYv we have some great products and services that can help our clients. 4WWSQVO\W5WV\M+IZTW1[MMINM_PW\\WXQK[ \PI\ _QTT JM WV \PM UQVL[ WN  \PW[M I\\MVLQVO7VMQ[\PI\TIZOMU]T\QVI\QWVIT[IZMUW^QVO \W_IZL[Âť[PIZML[MZ^QKM[ÂźI[XIZ\WN \PMQZ\ZMIsury management strategies. Theyâ&#x20AC;&#x2122;re looking for economies of scale, to reduce counterparty exposure and also to make sure that capital is working effectively and itâ&#x20AC;&#x2122;s not trapped incountry.

www.intelligentinsurer.com | www.bermudareinsurancemagazine.com

) [MKWVL NIK\WZ Q[ \PI\ \PMZM Q[ [W U]KP capital coming into the reinsurance market VW_\PZW]OP14;QV[]ZIVKMTQVSML[MK]ZQ\QM[ [QLMKIZ[ IVL KI\I[\ZWXPM JWVL[ _PQKP UMIV[ that rates are falling. The reinsurance market is heading into a soft market so those companies \PI\PI^M[W]OP\\WPI^MIUWZMLQ^MZ[MJWWS with direct insurance and reinsurance arms will do well, whereas those companies with a pure ZMQV[]ZIVKMNWK][_QTTZMY]QZMLQ[KQXTQVMQV\PMQZ ongoing approach. Q

DAY 1: Sunday September 8 2013 | MONTE CARLO TODAY | 19


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Monte Carlo Today 08/08/2013