Pragmatic and progressive—Swiss Re’s Tavaziva Madzinga works through difficult times

“What immediately struck me was how to work with our clients as they go through these difficult times,” says Tavaziva Madzinga, CEO UK&I, managing director, Europe Middle East & Africa at Swiss Re, reflecting on his first thoughts as he officially took up the post in January 2019.

He tells Intelligent Insurer that getting a grip on Brexit, UK domestic market growth and the knock-on impacts were among his first priorities. Madzinga was also struck, he says, by what was happening with Lloyd’s syndicates and their performance, as a huge number of them are Swiss Re clients.

“From a priority point of view, our reason for being is to take capital and earnings volatility away from our clients and to use our research and development capability to help them with the underwriting. So the first thing was ‘what more can we be doing for clients?’
“We are operating in that space where we are in the middle of Brexit, so another key focus for us was to be operationally ready. Contract wording, terms and conditions, licensing in the UK, were all in place.”

It is almost a year since he set his priorities, so what has changed?
Madzinga says that something that wasn’t talked about in the re/insurance market a while ago was culture.

“When Lloyd’s started to talk about culture I started to hear a lot about it. That’s a big and important one for Swiss Re. Gender diversity, flexibility of work and inclusion are a big focus for us.

“I was pleased to hear Lloyd’s coming out strongly talking about it, although I like to think we are generally ahead on diversity.”

Pay gap
In the UK, employers are required to publish their gender pay gap. Swiss Re UK’s figures for 2019, reported in December, were a median gap of 36.9 percent and a mean gap of 33.9 percent, excluding ReAssure which reports separately. It’s an improvement on the 2018 figures of 37.2 percent for the median and 35.8 percent for the mean.

However, Madzinga is not satisfied. “In terms of our gender pay gap, we are consistent with the industry, but those are not great results. We are certainly taking very serious actions to address that. Culture is a big part of my agenda in the next couple of years,” he says.

“The gender pay gap is definitely not where we would want it to be. It’s borderline embarrassing where the numbers are. What is pleasing is that just having to publish it is a good thing for everybody, so there is more transparency on the issue.”

Explaining the reasons behind the numbers, he says: “An element of this is historical, and then there is the talent pool from which you are fishing, which for us is the Square Mile of London.”

As a global business, he says, Swiss Re takes diversity and inclusion (D&I) very seriously.

“Depending on where you work globally, the nature of the diversity issues will be very different. For example, in the Middle East or South Africa or continental Europe, or Asia, there are a whole range of different issues.

“It pleases me that Swiss Re pays attention to all of that. More specifically here in the UK, we’ve taken an approach that says ‘yes, there are many forms of diversity, and it’s very important for us to create an environment where people can bring their whole selves to work’, irrespective of what form of diversity they have.”

He says that publishing the gender pay gap results has shone a light on one aspect of D&I but that the gender pay gap is “symptomatic of other issues”, which is a reason for the reinsurer to be “very big on flexible working”.

Swiss Re supports flexible working by ensuring the consistency and quality of its IT. Madzinga explains: “Whether you’re at home or in the office, on the train trying to get into work, or wherever you are in the world, it is all seamless. The technology allows us to give that level of flexibility to our employees.”

Swiss Re is also signed up to, and heavily involved with, the Insuring Women’s Futures (IWF) programme, he says.

“I personally like its holistic view. We found IWF insightful and inspiring. We’ve pledged to support its work and to work with our clients to support the work. Jane Portas, partner at PWC, and Sian Fisher, CEO of the Chartered Insurance Institute, who are leading figures in IWF, came in to talk to our staff, creating awareness, which was great.

“The companies that have signed up to IWF are big global players, so this becomes the new way of doing things. Certain practices become unacceptable, similar to what Lloyd’s is doing with the #SpeakUp initiative.

“You also have to believe that having diverse teams is good commercially for you as a business. At Swiss Re, we believe that. For us it is not just a nice-to-have at a global level.”

Fortunes
Business performance is never far from Madzinga’s thoughts. Asked how business is at the moment he says: “As a business our fortunes tend to follow those of our clients, so we are closely aligned to the pain that our clients are feeling.”

The global reinsurer’s half-year results for the group in 2019 showed a fall in net profit due to natural catastrophes, the Ethiopian Airlines crash, the Boeing 737 MAX fleet grounding, and a large reserve charge for its Corporate Solutions business.

Net income was down to $953 million for H1 2019, from $1 billion in the same six months in 2018. This was despite a strong reinsurance performance in property & casualty and life & health, and investment gains.

Madzinga says: “It’s not a secret that 2017 and 2018 were difficult years for everybody.

“What we do have as an advantage is that for all the earnings volatility and capital volatility that our UK clients face, we are part of a much bigger group. We need to be able to withstand that ourselves and the way we do that is by operating at scale and significant diversity, and our solvency is significantly superior.”

He adds: “One could argue that you need your priest to be able to hear all confessions but you hope that your priest operates at a level of integrity that is above average.

“I think that is what we bring to the table. We are also able to deploy significant research and development capability to help our clients with underwriting.”

He flags up another key issue for many in the market: cost.

“Cost is a big one for everybody, it’s a big issue for our clients. At Lloyd’s and at Swiss Re we’re applying a lot of technology to try to bring down the operational costs. It needs to be a lot more efficient.”

He says the reinsurer has had a lot of success with providing bespoke transactions and value-added services to clients.

“We also have our solutions part of the business where we are starting to talk about support services for our clients, helping them understand cyber, data analytics, etc.
“We have a lot of services that are away from the core business, away from our core transactions, which make us more attractive to our clients because we offer more than just capacity.

“I’ll say our greatest success this year has been around bespoke transactions, where we have significant capability. Only one or two competitors are able to rival us in the particular space.”

At the time of the interview, mid-December 2019, Madzinga is deep into renewals discussions.

“This particular renewal is a difficult one, it’s going to be a late renewal,” he says. “It’s difficult to say where rates and prices will settle, but you can dissect it by your different lines, so by property, property nat cat, non-cat, loss-affected accounts, and geography.

“We have sufficiently granular data at a client level to be able to differentiate, so my message would be that we’re not using a single brush across our clients, we want to work with our clients, looking at their particular circumstances.”

He says the reinsurer is seeing rates rise in the primary space, while retro has also risen, with reinsurance somewhere in between.

“Casualty is a difficult space, particularly UK domestic is difficult. We have seen the changes that have come through from Ogden, you’ve got claims inflation for whatever reason—whether it’s domestic or US, there’s significant claims inflation.

“My message is that we would work with our clients on a client-by-client basis. We would not make grand statements about where rates will be, I don’t think that would be appropriate.

“We work with clients on a client-by-client basis to help them achieve their objectives around renewals, difficult as it is. There will be tough conversations but we will work together with our clients.”