QBE Re focuses on sustainability and consistency

The reinsurance industry is at an inflection point and needs to prove that it has the discipline to sustainably deliver returns beyond its cost of capital to its investors. 

That’s the view of Chris Killourhy, managing director of QBE Re, who said the 2023 reset of rates, terms and conditions and attachments points needed to last more than one profitable year to secure investors’ confidence in the industry. 

Killourhy said the reinsurer needed to maintain consistency to earn customer loyalty. 

“We’re at a very interesting point for reinsurers,” he told Intelligent Insurer. “Overall, we are in a good space with the market, but I think we’re at a bit of an inflection point to see how the market plays out from here.”

He said that after Hurricane Ian and going into the January 1, 2023 renewals, the reinsurance industry had to raise rates and attachment points so “there was a clear differential between where insurers and reinsurers play”.

“What we need to see now is evidence that this is sustainable,” Killourhy said. “We have had times in the past where rates have responded and gone up well and attachment points have moved but if this is going to be a genuine reset, we need to see that this stays.

“The last thing we want is to see the reinsurance market doing what it has done historically—rates go up, we have a good year, capital comes in, discipline slips and we are back on the rollercoaster.”

Killourhy said buyers wanted sustainability. “I am very encouraged that the more mature buyers are putting real value on the sustainability of the market. Sometimes people talk about price and they want to find a way of getting more for their cover,” he acknowledged. “What 2023 showed, which was worse than higher premiums, was a complete lack of knowledge as to whether capacity was going to be there and at what price. 

“Buyers want to have more confidence in the price and availability of the product they’re buying from reinsurance. It brings too much uncertainty in insurers’ business models otherwise.” 

“Consistency is more than a goal; it’s a core principle of how we operate.”

Increasing client focus

QBE Re comes into Rendez-Vous de Septembre after a significant transformation over the last 18 months and, Killourhy, said the business was focused on consistency for its clients.   

“Consistency is more than a goal; it’s a core principle of how we operate,” he said. “In the reinsurance market where conditions can shift dramatically, we recognised that providing a stable and reliable offering is crucial for our clients and capital providers.”

The transition has meant the company has evolved from a collection of independent regional units into a cohesive global reinsurer.

“Previously, we operated as three separate businesses: one in North America, one in Lloyd’s, and one in Europe,” Killourhy explained. “This structure meant we had different approaches and client interactions in each region.

“By integrating these operations, we’ve created a more consistent and unified global presence.

“We noticed that operating independently in different regions led to inconsistencies in how we managed risks and interacted with clients,” he added. “Our goal was to therefore consolidate our operations and provide a more seamless experience for our clients and better manage our global risk exposures.”

Reducing the client base

One of the key strategies in achieving this consistency has been the reduction of QBE Re’s clients.

“We’ve significantly reduced our client count from around 1,300 to something closer to 500,” Killourhy said.

“This decision was not made lightly: it involved moving away from some longstanding clients, but it allows us to focus on a smaller number of key relationships more effectively.

“By concentrating on fewer clients, we are able to get closer to our cedants and provide each other with a higher level of mutual transparency.”

Managing a volatile market 

Killourhy described how the decision to streamline the client base had been driven by specific criteria.

“We look for clients who offer strong access to management, team longevity, diversification in their portfolios, and consistency in their buying patterns,” he said. “These factors help us build long-term relationships and provide a stable foundation for our clients and ourselves.”

In addition to internal changes, Killourhy raised the importance of consistency in managing market conditions.

“The reinsurance market is experiencing various shifts, but our commitment to consistency remains unchanged,” he said. “While market conditions fluctuate, we can focus on maintaining a steady approach to how we manage risks and interact with our clients.”

Chris Killourhy is managing director of QBE Re. www.qbere.com 

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

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