09 Sep 2003, 18:00 - 20:00 - Monaco
Swiss Re held a media reception at this year's annual "Les Rendez-vous de Septembre", the international convention of insurers, reinsurers, brokers and reinsurance consultants.
At the Rendez-Vous de Septembre, the reinsurance industry's annual meeting in Monte Carlo, Swiss Re Chief Executive Officer John Coomber and Michel Liès, Head of Europe Division, spoke to representatives of the international media about the challenges and outlook for the industry.
In his introductory comments, John Coomber outlined how the industry is currently characterised by two trends: a low interest rate environment and a depleted capital situation that continues to be stretched despite the capital inflows into the market since 2001. Both situations demand that insurers and reinsurers put risk management and a strict underwriting approach at the top of their agenda to achieve attractive returns on the capital deployed.
At the same time, the regulatory environment is in a process of change as a heightened awareness of security issues prevails.
Looking into the future, Coomber believes that hard market conditions will persist in 2004 and that prospects for earnings growth remain favourable. An important feature for the long term will be to avoid a highly volatile industry pricing cycle. "I dislike seeing a 20 % rise in prices, followed by a 30% fall," he said.
The continuing hard market was a theme picked up by Michel Liès in his outlook on the 2003 / 2004 renewal season for Europe Division's Property & Casualty business. In the course of the last year, property business has seen an increase in rates and it is anticipated that this positive trend will continue. There are also signs of higher rates and better terms and conditions in casualty insurance, "but more improvement is still needed to achieve satisfactory results," he commented.
One sign of improving conditions overall is the continuing trend towards shifting business from a proportional to a non-proportional basis. Among other features, a disciplined underwriting approach will need to include capturing accumulation and separately pricing risks such as contingent business interruption and removing unlimited covers where they are not legally required. The exclusion or the separate pricing of exposures such as new asbestos and terrorism will also continue.
To keep up the improvements in conditions, the reinsurance industry will need to focus on ensuring transparency in conditions and adequate pricing.