Article ID: f05191266d8cde9c16f1375bdf9a9680a466e71afde3fbdb5ec627e162cc9153
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French reinsurer Arundo Re is expecting some softening at the January 1 renewals, but has no constraints and will target maintaining profitability and being sustainable so the company is a good position when the market cycle turns, according to Laurent Montador, Deputy Chief Executive Officer (CEO). We spoke with Montador at the 68th meeting of the reinsurance industry in Monte Carlo, about what the reinsurer is expecting in the months ahead following discussions at RVS with clients. “With the market conditions at this phase of the cycle, we are expecting some softening, and we can deal with that if it is reasonable. But double-digit decreases again this year would be difficult,” said Montador. “There is no goal on the top line side, and if we don’t grow or don’t grow too much, it’s not a problem for the shareholders.” The Deputy CEO emphasised that maintaining profitability is vital at this stage, and with no constraints, and no goal in terms of turnover, it’s key to “continue to be sustainable and to position ourselves in such a way that we will be in a good position when the cycle turns again.” Montador told Reinsurance News that ahead of the renewals Arundo Re has seen some efforts to get lower attachment points, which he can understand from a risk sharing point of view if they are reasonable and properly priced. “The volatility has been taken by the cedents, and there are a number of frequent, mid-sized events. So, there was a part of earning protection that was not taken by the reinsurance, where the will is more to be capital protector. Earnings protection we can discuss with global partners, and we can also find ways to limit the volatility for our insurance partners by deals with proper structure and duration,” he said. “We continue to do business with existing clients, and there could be opportunities to get new clients. In terms of underwriting, we want to know the cedent, the needs of the cedent, the risks ceded with proper wording, and to be able to analyse and define with the client the structure of reinsurance that they need,” added Montador. Montador also discussed Arundo Re’s platform and technical structure, explaining that the reinsurer is continuing to build and to recruit people in certain areas. “Also, we have done projects with AI in order to increase our operational efficiency. We are also exploring the more generalised use of AI within the company in the different processes, from accounting to claims to underwriting administration. But also, for the actuaries and underwriters so that they can gather information very quickly on the underwriting side in order to have a quicker view of the risk,” said the executive. One key message from Montador was that Arundo Re has and will continue to have a good rating as the reinsurer is now for its own merits, and with an A rating, whereas before the company had a stand-alone credit profile of A-. “Additonally, the solvency ratio is above 220%, and we are in the process of doing a partial internal model in terms of capital adequacies. It will be helpful as well, and we’ll be able to leverage it when the cycle will go in the other direction,” he said. This year, France experienced some extremely large and damaging wildfires, and while Montador doesn’t expect this to lead to new products, the fires will raise the awareness of what is possible to have in France in terms of catastrophes. “Then there’s the heat waves around the world which surprised a lot of people, including the people in charge of prevention and so on. So, the awareness needs to lead to quicker reaction and proper anticipation. “And then, in terms of insurance and reinsurance with these kinds of events, perhaps we have to develop some clearer wording, as these fires also impact other lines of business such as motor liability,” said Montador. To end, Montador explained what Arundo Re can do to create the greatest value for clients in the softening market. “We have a certain size that allow us to have a very quick answer and clear decision that we are able to explain to the client and broker, and that is something very important,” he said. Adding: “More and more the past history will not reflect what is going on in the future because the risks are not stationary anymore, and so we have to see outside of the box to be able to detect small signals that could be either in the data or in the R&D papers, but not fully exposed. “We listen to the needs of our clients, and want to know them very well, and being able to provide the client with tailored solutions is something important. Above all, our view is to have a long-term partnership, and we have clients who have been with us for decades, and it’s very important to have that in mind. And so, within a certain corridor, we are able to accommodate. “We are not an opportunistic reinsurer, and neither a reinsurer that wants to have willingness to only write the top players, but not the others. Because at the end of the day, when you have a loss high up, the cedent would say, “well, you have chosen the wrong one this year.” If you have chosen everything, you are in a different position. And I think that’s the real value of partnerships.”
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