Swiss Re Corporate Solutions unveils plans to diversify, better manage volatility

Swiss Re Corporate Solutions plans to diversify its portfolio to better balance its book and volatility as it continues to transition from deep losses in 2019 and 2020, executives told an online ‘Media Roundtable’ event today (Monday Nov 8).

“Now we must focus on making our strategic positioning more sustainable and making sure our insurance market is viable through all parts of the cycle to increase the resilience of our portfolio,” Andreas Berger (pictured), CEO of Swiss Re Corporate Solutions, said.

A strong presence in property must be balanced by growing under-represented segments to both “optimize returns and manage volatility,” he said.

One key factor in achieving great portfolio diversification will be building a book of non-correlating risks through business cycles, officials added.

Accident and health represents one area that fulfils this function for the business, despite “a little bit less margin” available. “But it is steady,” Berger said, “and it brings down the average expense ratio.”

Swiss Re Corporate Solutions may likewise follow “big demand” into D&O insurance lines, he further indicated.

In P&C, Swiss Re Corporate Solutions may move to balance its strength in property business by writing more casualty business, with the caveat that the US corporate casualty market remains anathema. “We divested for very good reasons” including an outlook for strong social inflation, Berger said, who added that he remains “very skeptical” on outlook. Growth in casualty is “mainly an EMEA growth plan” with some Asia likely for good measure.

Top line growth will continue to be padded with much-needed rate increases, Berger said. “We still believe that inflation plus nat cat in Europe and in the US all has to be priced,” he said.

The company also noted that, should higher pricing drive the use of alternative risk transfer solutions such as captives, Swiss Re’s Corporate Solutions would still benefit through facilitating such solutions.

Cyber might be less prevalent in its future growth plans. Swiss Re Corporate Solutions said it is working to better understand and model the risk before growing its exposures beyond core demand from existing clients.

“We have a very conservative approach towards cyber exposures,” Berger said. A lot of coverage in the market “have not been modeled through” and that has left some players burnt. “We’re working and investing to understand cyber exposures.”

Swiss Re’s Corporate Solutions business is fully prepared for switching growth gears after its transformation, Berger insists. “We have transformed our business on multiple levels,” including bearing a “strong” balance sheet, he claims.

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