NewRe’s CUO Klinger sees benefits from M&A as demand for reinsurance grows

Artur Klinger, chief underwriting officer at the more than 90-year-old NewRe, told Monte Carlo Today that more companies are recognising the value of reinsurance once again.

He explained that the reinsurer, which became part of the Munich Re group in the 1980s, is looking to benefit from changing markets as part of its strategy for treaties and P&C as there’s a lot of mergers and acquisitions (M&A) going on.

“No-one will buy us and our shareholder won’t sell us, so we’re very stable, which makes us a good partner for treaties. Insurance companies want to move risk off their balance sheet, so we do retroactive solutions. And we give protection from volatility to the balance sheets,” Klinger said.

He said the retroactive area of business “seems to be a topic of conversation at Monte Carlo”.

“Unlike the last 10 years, when there was a trend to cede less premium to the reinsurance market because companies wanted to keep the premium and not sell it to the market, this seems to be changing.

“More companies are seeing the value of reinsurance again. Reinsurance stabilises their results, it helps them manage some liabilities, and that’s where we come into play. We really expect that the volumes ceded to reinsurance will increase,” he said.

Demand is back due to uncertainties such as climate change and geopolitical instability around the globe. As well as this, NewRe’s clients have more pressure on the cost side because they are moving towards digitisation—they need to invest a lot and increase their costs to be fit for the digital future.

At the same time they face all the risks of political and climate change, and this might give additional volatility to the balance sheet, as well as M&A.

Klinger added: “In the last 30 years, the market has behaved more rationally. That means that you need to provide value on the standard products and some areas where prices might increase based on the recent loss experience, in the US mainly.

“In other areas you probably have less of a price increase, perhaps some selected price increases.

“Price increases are always good, but NewRe is a lean company, so we always find ways to make business,” he concluded.