No region is immune from perils

Speaking to Monte Carlo Today ahead of the Monte Carlo Rendez-Vous, Renaud Guidée, chief executive officer of AXA XL Reinsurance, reflected on the current state of the reinsurance landscape, particularly in light of recent natural catastrophes and the ongoing challenges in various sectors.

“Risks are elevated in almost every product line,” he observed.

“If you look at the nat cat activity in the first part of the year, it has been extremely high in terms of monetary losses and across all kinds of geographies.” 

Guidée noted that no region had been spared from significant events and remarked that AXA XL Reinsurance was not focusing on only one type of peril.

“It’s not just windstorms: we’ve seen floods, droughts, wildfires, and heatwaves across North America, South America, Europe, the Middle East, and Asia.

“No region is immune, and no peril is spared,” Guidée continued. 

“The Baltimore bridge collapse in March was a reminder of the value re/insurance coverage offers but also how complex our industry is and how such events represent elevated underlying risks,” he said. “If I look at cyber, we’re just emerging from the CrowdStrike outage, which highlighted the relevance and importance of cyber insurance coverage. 

“And regarding long-tail lines, social inflation is definitely not going away.”

“Higher interest rates are making the sector more discerning.” 

Transparency in renewals

Guidée spoke of the importance of adapting to these challenges. “Transparency and data quality make a big difference,” he said. 

“The more open you are about your portfolio—how you manage it, and what the underlying data are—the better terms and conditions (T&Cs) can be offered. 

“As cover becomes more bespoke and fits to what the risks are today, the T&Cs will again improve,” Guidée added.

The current market environment presents both technical and financial challenges, with Guidée noting that the industry faced a “greater frequency, and often higher severity” of perils, making it technically challenging. 

“Higher interest rates are making the sector more discerning. The market is becoming much more alert to the financial strength and robustness of the reinsurers.

“It makes a difference when you have a strong underwriting acumen and a balance sheet with a very solid credit rating,” he said. 

Guidée emphasised that these factors were crucial for gaining the trust of clients. “You wouldn’t want your reinsurer to be unreliable at the very time you need them.” 

Describing the importance of having a “solid financial track record” and an “unparalleled” balance sheet, Guidée noted that AXA XL Reinsurance’s clients appreciate the company’s “global footprint, comprehensive product offering, talented teams and fortress balance sheet”. 

“Many of our clients tell us they want to award us more business due to our credit rating.”

Mutual benefits

“Reinsurance is vital for the smooth functioning of our economies, our societies and our communities at large,” Guidée said. 

However, this recognition of the industry’s importance is coupled with a call for better management. 

“We should be proud of our industry, but we must act responsibly,” Guidée urged. “It’s a big responsibility to manage, and collectively, as an industry, I know we are up to it.”

Guidée mentioned how the alignment of interests across the market was crucial, as insurers and reinsurers benefit when the other sector is profitable. 

“This mutual success ensures stability and long-term viability for everyone involved,” he stated.

“We wish each other well, which is a very specific feature of the industry, as well as there being a lot of dependency. 

“This interdependence is a unique and positive feature of the industry, and from what I can see, it’s functioning effectively in the current market,” Guidée concluded.

Renaud Guidée is chief executive officer of AXA XL Reinsurance. 

For more news from the Rendez-Vous de Septembre (RVS) click here.

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