Swiss Re ready to sweep-up rising margin nat cat at mid-year renewals

Swiss Re could head into the mid-year renewals with an above-market capacity and a continued willingness to take on the nat cat exposures eschewed by many, top officials have indicated.

“For me the context is a positive one,” chief underwriting officer Thierry Léger (pictured) told the Q1 earnings call of mid-year renewal scenarios.

“We expect companies like us that are backstop providers to again see a very attractive environment in terms of margin, but probably also in terms of further growth.”

The market at mid-year remains a rate-lifting story of demand beating supply, particularly as supply continues to suffer from loss-averse players and a lack of retrocession, Léger said. Inflation is also adding conditions very supportive of further rate gains.

“Demand is up,” Léger said while “the offer side may be stable, but in certain areas down.” Nat cat capacity has not fully followed the upward move in rates, he said.

Prices can do little but rise further. “This is a very positive environment for us …. a consequence of demand going up and offer not following the same way:  prices will go up.” Inflation “has to be reflected as well; prices definitely have to go up.”

The upshot:  margins at mid-year renewal look “certainly more attractive” than in the year-prior renewals or even in the recent April renewals.

Swiss Re attributes some of its above-market appetite for nat cat to lessons taken from its modelling. “We feel confident in our models; we feel very confident in our abilities to structure the right opportunities.”

Another portion comes from its higher level of diversification, Léger indicated. Léger claims margins can double when taken across all P&C lines versus monoline nat cat takers, then jump again on a business blended with life and health, he said.

“It’s a significant advantage,” Léger said. “We don’t give that advantage away too easily to our clients, but it does position us well in the nat cat space.”

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