Reaping the rewards of an upgrade

Following its rating upgrade to ‘A’ last year, Sava Re is taking on more cat business and enjoying steady growth, as the firm’s Peter Skvarča and Edward Ottino tell Baden-Baden Today.

What are your expectations for negotiations in Baden-Baden?
Considering the current state of the market our hope would be for a flat renewal, but the continuing abundance of capital means that our expectations will be dampened with brokers and cedants pushing for modest reductions.

In addition, the global market (apart from specific regions such as Japan, and the Bahamas) has also seen a relatively benign year in terms of large losses. The traditional cycles of the past are long gone and now we talk about hardening in terms only of affected regions, individual programmes or even layers within cat programmes.

Where are you seeing growth: by line of business and region?
Since we increased our cat capacity in July, we have been able to take larger shares on existing accounts and also enter new programmes which due to aggregate constraints we were precluded from entering before.

This increase in capacity follows on the heels of our rating upgrade to ‘A’ last year (by both S&P Global Ratings and AM Best), so the timing couldn’t have been better. Our core focus remains property (cat), but we are starting to review our positions on other lines of business such as marine and specialty lines.

Where do you see further opportunity for growth in Europe?
Europe has always been a significant market for us it contributes approximately 30 percent of our inward premium and almost 50 percent towards our financial results. Despite having reached our cat capacity limits in many regions we feel that we still have room to grow in other lines of business.

Our daughter companies are also contributing to this growth, in terms of taking advantage of opportunities in their home markets, such as Slovenia, as well as looking for niche opportunities in the FOS space, where we already are starting to see some projects come to fruition.

You were upgraded 12 months ago. How has this helped the business?
As our book is extremely stable, and we haven’t changed our overall strategy, it is not easily quantifiable, but an ‘A’ from S&P and AM Best has definitely helped us to defend or even improve upon expiring lines.

A more visible consequence has been our accessing of government schemes and pools, such as terrorism or natural catastrophes, as well as solvency layers which we tend to favour.

What sets Sava Re apart as a reinsurer?
Despite our modest size, globally we have a reputation for providing quick, flexible, professional and efficient service, in terms of underwriting as well as claims, as we are not bogged down by the heavy bureaucracy endemic in larger companies.

A good example is the fact that not much more than a week after Hurricane Dorian impacted the Bahamas we had made our first claims payment. Cedants and brokers value this ability and desire to respond rapidly.
Another differentiating factor is that we are under very little pressure to write new treaties and potential clients appreciate this patient approach, which normally works in our favour when they come to allocate shares to new reinsurers.

Are you investing in or embracing technology to improve your business?
We firmly believe that investment in new technology is essential for the future development of our group. We are in the process of extensively upgrading our core IT system, which will allow improved deployment of capital, risk control and modelling, as well as more efficient portfolio management.
In addition, at the group level we are developing a robust IT platform as part of our digitisation agenda, a strategy which puts the customer at the forefront of our focus.

What are your goals/objectives over the next 12 months?
Our main goal is to continue doing what we’ve done for a number of years: steadily growing our book through the careful deployment of aggregates. Our lean business model means that we are able to enter markets around the world extremely quickly, so we will continue this approach: to grow modestly while maintaining excellent results.

Peter Skvarča is an authorised representative of the management board of Sava Re. He can be contacted at: peter.skvarca@sava-re.si
Edward Ottino is director of area managers and marketing at Sava Re. He can be contacted at:  edward.ottino@sava-re.si