Insight and Intelligence on the European and International (Re)insurance Markets

23 OCTOBER 2017 22 OCTOBER 2017

MONDAY SUNDAY BADEN-BADEN Industry cannot afford to rely on post-event turn: Nash hose (re)insurance industry ensured survival,” Nash told the audience. “All of these are disrupting the world order,” Tparticipants waiting for a widespread “For them to survive they need to find new he said. market turn following major catastrophe and better ways of doing business.” However, people and organisations will losses will not necessarily survive in Commenting on the conference’s theme always want to protect their assets, and lay today’s fast-paced and rapidly evolving of disruption, Nash argued that the industry off some of their risk to others, the executive world, the president of Guy Carpenter’s was not unfamiliar with the concept. explained. international division has claimed. He pointed to the way in which the There will also always be those with capital Speaking at the Guy Carpenter Baden- creation of the Bermuda market had willing to assume that risk, he added. Baden Reinsurance Symposium yesterday, changed the status quo for catastrophe “In between and around those poles, James Nash emphasised the importance of writers at Lloyd’s, how catastrophe models everything is subject to change,” Nash said. innovation in achieving success as the pace had altered the market’s view of risk, and At the event, Munich Re CEO Joachim of change in the sector accelerates. how the entry of new capital had “stirred up” Wenning echoed Nash’s comments in a later Nash said that the capital structure of the the market as previous examples of change. keynote speech. industry had changed significantly in recent But “the pace and diversity of disruption is “Disruption does not automatically bring years, with the most dramatic change taking changing”, Nash said. opportunities, the industry must earn them,” place in the last five years. New sources of data, such as telematics he said. And following a succession of Q3 cat losses, and the Internet of Things, as well as new Clients are changing the way they do it is now waiting to see how the capital ways of using this data, are changing the business, and the (re)insurance industry markets players respond. way the world conducts its business, he must create innovative, digital products to “If the theory plays out in practice, those explained. suit their needs, the CEO continued. participants waiting for the market to react Emerging products are creating new risks, “Going forward, digital transformation with rationing of capacity – followed by while workflow, processes and distribution – of data and technology – will serve as a significantly higher prices – will no longer be methods are also changing, Nash continued. bridgehead to sophisticate our value drivers.”

03 Superyacht claim to 06 Munich Re Syndicate Kessler, CEO, Scor cost EUR40mn moves into marine XoL 17 Insurance stocks rise 04 Cyber demand surges 08 Swiss reinsurers in Q3 despite losses Ins ide 05 Zurich to market post full year loss 21 Interview: Emmanuel £2bn UK EL book 13 Interview: Denis Clarke, CEO, PartnerRe

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10.9.17_Privacy_215,9x279,4_en.indd 1 10.10.17 15:58 comment

AIR is from Mars, RMS is from Venus

ake no mistake about it, at times This is what the magnificent seven How could models be wrong this time? Mlike these, the modelling and ratings windstorms did – they multiplied the Unfortunately, the Maria modelled loss agencies are the de facto regulators of running average and piled on the pain. numbers tell a different story. the marketplace. (Thanks to Nicolas Taleb’s The Black Swan for RMS says $15bn-$30bn. AIR says The last time they had this much power the analogy). $40bn-$85bn. How could this possibly be? at their disposal was in 2005 and 2006 after There is no overlap. Not only is there no $85bn of Katrina, Rita and Wilma losses In statistical space, no one overlap, but the difference between one’s had been cranked through the reinsurance “ highest estimate and the other’s lowest is pipes. can hear you scream $10bn. Modellers had the hardest time of it. They ” The two estimates orbit on different had seriously underestimated the impact of planets with a huge expanse of emptiness flood and demand surge on industry storm Understandably, there was some between them. damage and this left them with egg on their questioning of the wisdom of this So either one is right and one is wrong or, faces. methodology and plenty of grumbling, if the loss is somewhere in the $30bn-$40bn What’s more, KRW followed a very active but the new average was duly loaded into range, both are wrong. 2004 season that had already produced the models on top of all the flood, demand But as all good quantum physicists know, four Florida landfalls in the form of Charley, surge and other adjustments. sometimes light can behave like a wave or Frances, Ivan and Jeanne. Market wags Then came the final tweak – it was over to like a particle. It can be two things at once. would describe Wilma as the seventh the ratings agencies for their interpretation. Indeed, how you observe it will actually hurricane of the 15-month 2004/05 season. They largely accepted the new output change the light from one form to another. This meant that models incorporating from the models and loaded on an Perhaps insured losses exhibit similar a short-term average loss adjustment extra prescription of caution, as well as behaviour and both estimates can be suddenly had to include a prior period that diversification for good measure. simultaneously right…? held a septet of US landfalling hurricanes. The result was a slow squeeze. New start- Meanwhile, back in the real world, us They had been beaten by the statistical ups had to promise pretty strong returns (re)insurance mortals are at the mercy of the equivalent of trying to estimate the to get over the A- hurdle and incumbents theoretical Gods. average earnings in a random roomful of knew that they had to push for real rate In statistical space, no one can hear you professional men. rises or risk a downgrade. scream. If you know reasonable factors like age, That was then and this is now. profession and nationality you can very Models are 12 years more sophisticated. soon come to a realistic and statistically These days Google has an AI robot that can accurate figure for what the average wage teach itself to beat the best Chinese Go of the room will be. masters from scratch in 30 days. Satellites The problem comes when Warren Buffett can see what you are having for dinner on Mark Geoghegan, Managing Director suddenly walks in and increases your any given night and drones can fly where average by a factor of 100. even the hardiest loss adjuster fears to tread. [email protected] Saudi superyacht claim to cost market EUR40mn+ superyacht that ran aground in Salman reportedly bought the yacht, throne of Saudi Arabia. The 32-year-old Athe Red Sea is expected to cost which has a total insured value of is the youngest defence minister in the the Lloyd’s marine market EUR40mn EUR420mn, in 2015 from the Russian world and is spearheading the listing of ($47.2mn), The Insurance Insider oligarch Yuri Shefler. According to the New Saudi Aramco, the state oil company, on understands. York Times story, Shefler moved off the international stock exchanges. The Serene, one of the largest superyachts yacht the same day. The loss will add extra pressure to an in the world, hit a reef on the Egyptian The protection and indemnity (P&I) insurer already strained yacht insurance market. coast not far from Sharm El Sheikh in late for the vessel is British Marine, a subsidiary Hurricanes Harvey, Irma and Maria have August. of QBE Europe, according to data on the inflicted significant pain on yacht insurers, The yacht is insured in Lloyd’s through liability insurer’s website. with losses from the latter two events set to the lead yacht consortium, which is led by There was no oil leak from the yacht. Any run to hundreds of millions of dollars. MS Amlin, according to market sources. damage to the reef could result in a liability The Insurance Insider reported on 10 Following markets include a number of claim, but it is not thought that such a claim November that Norwegian Hull Club had other Lloyd’s syndicates. has yet been made. tapped reinsurers for $105mn following The Serene is owned by the Crown Prince Nevertheless, the Serene was towed away catastrophe losses from Irma in the of Saudi Arabia, Muhammad Bin Salman, from the reef by tugboats – something Caribbean. Muhammad bin Salman could the New York Times reported in a profile of which is likely to generate a P&I claim. not be reached for comment. MS Amlin the prince published in 2016. Muhammad Bin Salman is the heir to the declined to comment.

DAY 2: MONDAY 03 ne ws news

Carriers must be allowed to recoup HIM losses: Munich Re he (re)insurance sector will lose its In the same session, James Nash, president Wenning said start-ups are “good at Tappeal to investors if it cannot begin of Guy Carpenter’s international business, one single activity but they couldn’t to recover some of the losses sustained noted that the catastrophes had generated potentially with their proposition replace an from hurricanes Harvey, Irma and Maria several “known unknowns” ahead of the 1.1 incumbent”. (HIM), according to Munich Re CEO renewals. “The incumbents are also strong in that Joachim Wenning. “We see a lot of numbers put in front of us they have a brand, they enjoy trust. The The executive, who succeeded Nikolaus but the public releases don’t add up to what start-ups can’t possibly have that same trust.” von Bomhard as CEO of the reinsurance the industry is talking about.” When questioned on whether incumbents giant in April, was speaking at the Guy He said that the second of these arose from were disadvantaged by their legacy systems Carpenter Baden-Baden Reinsurance the asymmetric nature of the HIM losses. Wenning said: “The challenge is to overcome Symposium. “It will be a capital event for some but not these disadvantages.” He said of the three North Atlantic for others,” he said. “Those who don’t overcome them and catastrophes: “For the three of them we Nash named the extent of the capital lock- come up with something stronger than are talking about a $100bn event, maybe up for the collateralised writers as the third before may lose.” $110bn – I don’t know, it’s guesswork. Don’t “known unknown”. Scor Global P&C head of strategy and say it won’t have an impact”. But he dismissed the notion that HIM development Adrian Jones also dismissed He continued: “The industry is going to lose comprised a major capital event and called expectations of major disruption from assets, so if there won’t be the possibility for a rational approach from reinsurers at outsiders to the (re)insurance sector in the to earn back assets, the industry will have 1 January, urging them to avoid blanket near term. become sustainably less attractive than what moves on rates. He noted that the change in the sector’s it was thought to be.” “Each customer should be treated make-up will be “somewhat glacial” over the The executive said that an “appropriate differently – there shouldn’t be a broad next few years. balance” would see reinsurers placed in a brush approach,” he said. “When you look at the top reinsurers in position where they could earn back their On the same panel, speakers agreed that P&C and life these are companies that have losses. “How much, how quickly, I can’t disruptive start-ups are unlikely to usurp the been around for a long time and are not predict – if I did I wouldn’t tell you.” position of existing (re)insurers. going anywhere.” Cyber reinsurance demand surges as attacks spook cedants he cyber reinsurance market is seeing their net exposures, which come to them via thought to include Liberty, AIG and Zurich. Tmore demand for stop-loss and per- retentions or cyber sub-limits, one broker Meanwhile, Equifax’s September data event covers after a spate of high-profile said. breach resulted in losses that went straight cyber-attacks which generated losses in He continued: “These insurers say they are through its $150mn cyber tower, and the wider (re)insurance space. willing to write cyber non-affirmatively, but market sources have suggested the firm’s Sources told this publication that carriers they don’t want any of the exposure. They directors’ and officers’ policy could also be writing cyber non-affirmatively, or on a are ceding virtually all of it out of the back.” hit as a result of the attack. silent basis, were concerned about their net This increased demand for such covers One reinsurance broker said insurers exposures to cyber-attacks, with reinsurers is also part of a wider shift towards non- had been writing cyber risk “with zero starting to push back on wordings. proportional cyber reinsurance, as the underwriting information and for no To date there has been a “head in the sand existing standalone cyber market becomes additional premium”. approach” towards silent cyber exposures more comfortable with its loss ratios, He added: “It’s like writing a new property on the part of insurers, which have typically sources said. account with no idea of the size of the assumed that they will be able to cede The developments come following a development, the postcode, or the building cyber risk through a professional lines or number of high-profile and economically regulations.” casualty treaty, broking sources said. damaging cyber-attacks, such as NotPetya However, the cyber insurance market is However, increasingly cyber is being and WannaCry, where insurers found they quietly hopeful that the impact of recent excluded from these treaty placements as were exposed to losses via property or major catastrophe events on the wider the wordings are not fit for purpose, and other policies. (re)insurance sector will lead to a tightening reinsurers are becoming more concerned The Insurance Insider revealed in of terms and conditions, meaning less cyber about aggregation. September that the property market could risk will be written non-affirmatively. As a result, cedants are now looking for be facing a business interruption claim of “Everyone is looking to 1 January,” specific cyber reinsurance to cover these up to $1.5bn from US pharmaceutical giant one cyber underwriter said. “There is an risks either on a stop-loss or per-event basis. Merck, which was a victim of the NotPetya opportunity here to draw a line under all Even those cedants which can cede cyber-attack. the non-affirmative cyber which has been their cyber risk into their existing treaty The claim is likely to be heavily contested written into the wider market. It would be a arrangements are looking to find cover for by Merck’s property insurers, which are positive for everyone.”

04 DAY 2: MONDAY ne ws news

Zurich to market £2bn UK EL book in 2018

urich is considering bringing its acquired in February. its final stages. Zmammoth £2.0bn ($2.6bn) legacy UK Reinsurer Swiss Re has also previously Also understood to be on the block is a employers’ liability (EL) book to market in said that it had sated its appetite for UK EUR200mn German architects’ professional the first half of 2018, The Insurance Insider EL exposures after sealing a reinsurance indemnity portfolio, and a Spanish med-mal has learned. agreement for Aviva’s £1bn+ UK industrial book thought to hold just under EUR200mn Sources told this publication Zurich is in and EL book in 2015. in liabilities. No adviser has been appointed the very early stages of any sort of disposal for either book. process, and is yet to appoint an adviser on Zurich has been notably Zurich’s use of the legacy market is part the book. proactive“ in addressing its of a wider push by live carriers to free up The legacy market has known about old liabilities, which are a capital by addressing their back books. Zurich’s £2bn book for more than two years. This, coupled with Solvency II and other The insurer moved the portfolio, which drag on its balance sheet more stringent capital regulation, is holds liabilities from 2006 and prior, off the ” expected to bring a wave of liabilities to the UK balance sheet and into the Zurich Legacy Berkshire Hathaway also has the scale market on both sides of the Atlantic. Solutions division, which is currently led by to take on a book the size of Zurich’s, but However, while the UK and US have Neil Freshwater. has demonstrated little interest in UK EL embraced legacy as a capital optimisation So far there has been little movement on exposures. Sources have also previously tool, Europe has been slower to get on the seller’s part to transfer the book to the indicated that Berkshire Hathaway’s services board, hindered in part by the negative legacy market. are typically more expensive than other sentiment attached to run-off business. However, during that time the UK market options available in the market. Zurich declined to comment. has seen a widespread sell-off of old EL The possibility of pooling Zurich’s EL liabilities, with almost £4bn of reserves exposures so they might be split between UK EL legacy deals changing hands. a number of acquirers has been mooted in Company Gross reserves Stage One source suggested to this publication legacy circles, but to date there has been Aviva £1bn+ Reinsurance deal struck with that if Zurich came to market with the book no suggestion that this is how Zurich would Aviva in the first quarter of next year it may be approach the disposal. Axa £1.1bn Deal struck with Riverstone “too soon” for the many legacy players that Zurich has been notably proactive in had already acquired a UK EL book. addressing its old liabilities, which are a drag Allianz £185mn Deal struck with Catalina Most of the major legacy acquirers have on its balance sheet. The Hartford £477mn Deal struck with Catalina already taken on at least one sizeable Most recently, it awarded exclusivity to (excess) portfolio, prompting sources to question Catalina for its EUR400mn ($480mn) German QBE £170mn Reinsurance deal struck with which player would have the appetite or the medical malpractice legacy book. Armour bandwidth to take on a book of such a size. A bidding process is underway as well for RSA £957mn Deal struck with Enstar Legacy heavyweight Enstar is one a $300mn Australian motor liability book, Zurich £2bn Adviser to be appointed acquirer of the right scale, but it is currently for which EY is the adviser. It has been Source: The Insurance Insider digesting RSA’s £957mn portfolio, which it suggested this particular process is nearing Hyundai to hand cargo market $60mn Harvey claim he marine cargo market is bracing of 2012. It is not yet clear which carriers Maria will easily run to hundreds of millions Titself for a $60mn claim from are on the loss, which is expected to be of dollars. Hurricane Harvey after South Korean syndicated across the global marine market. Losses from a single yacht facility auto manufacturer Hyundai Motor Goods being stored at ports and goods in underwritten by Norwegian Hull Club led Company suffered damage to a transit and waiting in warehouses tend to the mutual to warn reinsurers it would be consignment of cars in transit. be covered by cargo policies written in the tapping them for a $105mn claim. After the storm’s landfall in August, global marine insurance market. Other marine losses stemming from the flooding inundated a Texan port terminal Details of cargo losses from Harvey have storms include a significant marine liability where cars had been stored while awaiting been hard to come by in the two months claim from the running aground of the distribution to various locations in the US. since the storm hit Texas. oil drillship Paragon DPDS1, which broke The claim is the first major cargo loss to be Other auto manufacturers likely to put in free from its moorings during Harvey and notified following the storm, but is sure to cargo claims are thought to include VW and blocked the entrance to Corpus Christi be followed by a spate of others as mariners Fiat Chrysler. harbour. come to terms with the worst quarter for One senior marine source said that the The vessel ended up colliding with a the market since Superstorm Sandy inflicted cargo loss from Hurricane Harvey could be as tugboat, causing the port to shut for several $2.5bn-$3.0bn of losses in the third quarter high as $1bn, and yacht losses from Irma and days.

DAY 2: MONDAY 05  news 

Munich Re Syndicate begins writing marine XoL unich Re Syndicate Limited has requirement for it.” partnership in Munich, and will transfer to Mbegun underwriting a London The Munich Re Group’s core marine XoL London as head of reinsurance for Munich market marine excess-of-loss (XoL) treaty treaty business will remain in Munich, where Re Syndicate, assisted by Katharina Köhler. portfolio, The Insurance Insider can reveal. much of the firm’s underwriting expertise Gosch said there was a need to “provide The syndicate commenced underwriting is located, while the syndicate will write support and capacity to a market that has for the book last Friday, and also appointed complementary business. suffered dislocation as a result of the recent Sabine Gosch as head of reinsurance, “It’s not transferring business from Munich, catastrophe losses”. reporting to chief underwriting officer it’s purely augmenting that core portfolio,” Marine treaty has endured a torrid time Dominick Hoare. Hoare explained. over the past few months, following three Hoare explained to this publication that He added that the syndicate’s aim was to major Atlantic hurricanes. the syndicate was able to take the decision access those clients or programmes outside Mutual marine insurer Norwegian Hull from an idea, to boardroom and Lloyd’s existing core Munich Re relationships. Club warned its reinsurers of a large loss approval, to being ready to write business in The CUO declined to comment on target from Hurricane Irma, issuing a provisional just two weeks. line sizes, saying only that they would be estimate of $105mn. “This is a dislocated market right “significant but not of the stature that Two of holiday company Sunsail’s yacht now – we’ve been in the market buying would destabilise the market or cause an fleets were wrecked by the Category 5 replacement cover for our programme and issue”. hurricane as it tore through the French we know it’s not easy, there’s not a lot of Hoare added that London had a unique territory of St Martin and the British Virgin capacity around right now,” he said. distribution base, with the majority of Islands in September. “We thought rather than coming in when marine reinsurance brokers based in the UK In addition, the ongoing Californian the market is full of capacity, we could capital. wildfires are expected to hit inland marine come in and provide it when people see New appointment Gosch is currently chief reinsurers, which cover tractors, harvesters value in the product and clients have a real operating officer for the firm’s global marine and other equipment related to wineries. European sponsors shy away from cat bond market he two largest continental reinsurers from its Lion II Re 2017-1 cat bond in June. which would open the doors to new risks Thave been looking outside the The bond covers European flood risks in future. cat bond market for retro support in alongside European windstorm and Italian Another new European risk was brought recent years, but a number of multi- earthquake perils, all on an indemnity, per- to market last year by Allianz Risk Transfer, peril insurance-linked securities (ILS) occurrence basis. which closed its Market Re parametric transactions have kept a supply of The deal was the first ILS transaction weather bond at $30mn to insure against a European risk flowing into the market. to include European flood and replaced warm European winter. Swiss Re has been largely absent from the insurer’s EUR190mn Lion Re cat bond The JLT Capital Markets-issued bond the cat bond market for several years, issued in 2014, which matured this year. brought weather reinsurance to the ILS instead relying on sidecar capital from its At the close of last year, Generali market for the first time since 1999. longstanding Sector Re vehicle. In the same completed its new motor liability More European risks are in the pipeline vein, Munich Re’s Queen Street cat bond reinsurance securitisation at EUR255mn, for the ILS market. issuances have been increasingly sporadic providing it with indemnity reinsurance on Last week, XL Catlin launched a $150mn as it has been expanding the more recent its third-party motor liability business. Galileo Re 2017-II cat bond, which will Eden Re sidecar. It was the first ILS transaction to focus on cover European windstorms as well as US, And in a blow to investors seeking motor liability and was heralded as a deal Canadian and Australian risks. diversification through exposure to non- US wind deals, several other European European cat bonds issuances from smaller carriers also lapsed Deal Sponsor Size (EURmn) Peril this year. These included Groupama’s Green Eurus III 2012 Hannover Re 100 Euro wind Fields and a Hannover Re bond. Atlas VII 2012 Scor 130 Euro wind, US wind and quake However, in the past two years, European Queen Street VII Re 2012 Munich Re 63.5 US and Euro wind risks have featured on total cat bond limits Calypso Capital II 2013 Axa 350 Euro wind of almost EUR1.6bn ($1.0bn). This has been Green Fields II 2013 Groupama/Swiss Re 280 French wind driven by just two sponsors – Generali, with Galileo Re 2015 XL Catlin 250 Euro wind, US wind and quake some innovative risks for the ILS market, Market Re 2016-5 Allianz Risk Transfer 26 European warm winter and XL’s massive multi-peril Galilei Re deals. Horse Capital I Generali 255 European motor third party liability loss ratio XL raised $1.275bn from two concurrent Lion II Re 2017-1 Generali 200 European wind, Italian quake, European flood Galilei Re issuances in December 2016. The Galilei Re 2016 and 2017 XL Bermuda 1,100 European wind deals cover European windstorm as well as Pipeline earthquake and storm risks in the US and Galileo Re 2017-1 XL Catlin 127 European windstorms Australia. Source: Trading Risk Meanwhile, Generali raised EUR200mn

06 DAY 2: MONDAY SCOR’s strength stands out clearly

O5 O8 O2

Stable Stable Outlook Outlook C20 C10 HO5

O4 C21 O1 AA- AA- HO1 Standard & HO2 Fitch Poor’s Ratings

HO5 Aa3 A+ C19 C15 Moody’s H4 AM Best

HO6 Stable Stable Outlook Outlook

C12 C18

“SCOR’s success story continues. Over the past 15 years, the Group has overcome obstacles, faced economic and financial crises, and absorbed major natural catastrophes. Throughout this long journey, SCOR has held its course. SCOR has achieved the solvency and profitability strategic targets set out in its successive plans. It has grown, reinforced its financial strength and expanded and deepened its franchise. It has diversified its portfolio and developed a superior risk management strategy. Today, SCOR is a truly global group. The upgrade of our rating to A+ by A.M. Best on September 1st, 2017, which follows the upgrade to AA- by S&P and Fitch in 2015 and to Aa3 by Moody’s in 2016, once more demonstrates the relevance of SCOR’s business strategy and confirms SCOR as a Tier 1 global reinsurer. The Group’s strength is a clear benefit for our clients.”

Denis Kessler Chairman & Chief Executive Officer www.scor.com Analy sis 

Swiss reinsurers made underwriting loss in 2016 wiss reinsurers posted an overall in 2016. This situation was aggravated by a reinsurers plunged in a poor year for Sunderwriting loss in 2016 as their higher claims burden in the liability sectors investment returns. Profits fell by 65.6 collective non-life combined ratio in North America and other regions.” percent to CHF2.92bn and investment increased by 10 percentage points Gross written premiums (GWP) in the income collapsed by 67.1 percent to year-on-year to 106 percent, data from Swiss reinsurance market rose by 26 CHF2.3bn. the Swiss Financial Market Supervisory percent in 2016 to CHF51bn ($52bn). The average return on equity (RoE) for Authority (Finma) shows. Finma attributed the rise in GWP to “very the Swiss reinsurance market fell by 17.58 The deterioration in the combined ratio significant” intra-group reinsurance deals. percentage points year-on-year to 9.80 came after claims and expenses rose. Reinsurance premiums for long-tail lines, percent. Finma said the overall claims ratio for such as liability and accident reinsurance, The Zurich reinsurance market’s solvency the non-life reinsurance sector rose by 5.3 jumped by 41.4 percent to CHF14bn, the ratio improved in 2016 from the year percentage points to 61.0 percent in 2016. regulator said. before. According to the aggregate results Short-tail claims for non-life reinsurance Short-tail reinsurance premiums of the Swiss Solvency Test, the solvency business crept upwards by 1.5 percentage increased by 14.1 percent, while the life ratio climbed by 17 percentage points to points from the previous year, giving Swiss reinsurance top line leapt by 51.2 percent. 217 percent. reinsurers a short-tail claims ratio of 59.2 Natural catastrophe reinsurance showed a The statutory equity capital base fell by 4 percent. slight fall in GWP, declining by 3.8 percent percent over the year from CHF31.0bn to For long-tail classes, claims increased by to CHF2.6bn as carriers trimmed cat CHF29.8bn. However, the Swiss reinsurers’ 4.2 percentage points to 65.6 percent. exposure. equity capital base had significantly Although still below average, the claims Finma said the strongest growth in the increased in the two preceding years from ratio for cat-exposed business jumped by Swiss reinsurance market came from North CHF26.9bn in 2014 to CHF31.0bn in 2015. 22.9 percentage points from 2015 to 50.3 America, where GWP increased by 63.3 Looking forward to results for the full percent, in a year when several midsized percent to CHF19bn. year 2017, it is likely the Swiss reinsurance catastrophes struck Europe. The regulator attributed premium growth market will record another underwriting According to data from cat modelling firm in North America to the impact of a few loss. Perils, European catastrophe incidents last large placements. On 20 October, Swiss Re estimated year included Extratropical Cyclone Egon, The Swiss reinsurance market increased that its claims burden for hurricanes which caused an estimated EUR275.0mn premium generated by Asia Pacific Harvey, Irma and Maria and the Mexico ($325.1mn) in losses, while over £1.0bn business by 11.6 percent to CHF11.2bn. earthquakes would be around $3.6bn, net ($1.3bn) in UK flood damage came from The market’s top line for reinsurance in of retrocession and before tax. storms Eva-Frank and Desmond. Europe rose by 6.6 percent to CHF9.8bn, The reinsurer estimated that total insured while reinsurance premiums in the rest losses from the disasters would be $95bn. US claims also hit of the world grew by 9.6 percent to Swiss Re noted that the claims totals were Swiss reinsurers CHF1.78bn. subject to a “higher than usual degree The Finma report said: “In 2015, the long- In total, non-life reinsurance expanded by of uncertainty”, and could face further tail sector benefited from liquidations in 22.7 percent from 2015 to CHF31.5bn. readjustment in future. Swiss Re is by far actuarial reserves, which was not the case However, the aggregate profits of Swiss the largest Swiss reinsurer, while global commercial insurance giant Chubb has had Loss ratios for direct Swiss business its headquarters in Zurich since the 2015 merger with Ace. Class Loss ratio 2015 Loss ratio 2016 Y/Y change Health 77.4% 77.7% +0.3 pp Insurance Fire/property 46.1% 45.7% –0.4 pp For the overall market, including insurance, Accident 76.1% 72.8% –3.3 pp reinsurance and life, profits increased by Land vehicles (liability) 65.5% 64.7% –0.8 pp 21 percent to CHF8.1bn. Average RoE Land vehicles (comprehensive) 44.2% 39.3% –4.9 pp bounced up by 2.25 percentage points to 14.65 percent. Liability 38.9% 41.5% +2.6 pp Premiums for all lines rose by 6.1 percent Marine, aviation and transport 42.0% 50.7% +8.7 pp to CHF131.79bn. Legal expenses 52.7% 53.2% +0.5 pp Health insurers did particularly well, Financial losses 63.5% 70.9% +7.4 pp seeing profits rise by 25.6 percent to Credit and surety 41.8% 40.1% –1.7 pp CHF7.01bn. Tourist assistance 72.8% 76.2% +3.4 pp For non-life and health carriers, GWP was down 1.9 percent in 2016 to CHF47.97bn. Total 63.1% 62.9% –0.2 pp Source: Finma Continued on page 10

08 DAY 2: MONDAY Analy sis

PartnerRe brings clarity to uncertain times.

partnerre.com Analysis

Continued from page 8 Premium fell materially in marine, aviation A fall in both crime and the number of and transport lines, with the Swiss market car accidents that resulted in serious bodily Claims also dipped slightly by 1.9 percent. writing CHF363mn across the three classes injury helped push down overall claims by Overall investment returns for non-life in 2016, which was 7.5 percent less than in 0.2 percent. insurers increased by 0.81 percentage the year before. Marine, aviation and transport was points to 4.44 percent. The average RoE for Liability premiums also dropped, by 1.2 the line that had the biggest increase Swiss primary insurers improved by 2.91 percent to CHF1.98bn. in the loss ratio over 2016 compared to percentage points to 17.82 percent. the previous year, with the claims ratio A poor year for profits at Zurich Insurance Market share stable increasing by 8.7 percentage points to 50.7 Company in 2015 had caused aggregate The relative market share of the direct percent. profits for Swiss insurers to fall, but last Swiss insurers changed little over 2016, the Financial lines losses also increased, with year profits returned to the levels they Swiss regulator said. the loss ratio shifting up by 7.4 percentage were at in 2013 and 2014, Finma said. Axa Insurance led the pack with an 18.6 points to 70.9 percent. Non-life insurance companies had percent share over the year – a 10 basis Finma noted that non-life insurers premium growth of 2.1 percent, compared point fall from its market share in 2015. continued to enjoy “very comfortable to 1.2 percent in 2015. Axa wrote CHF3.27bn in premiums in solvency levels”, with the Swiss Solvency Finma noted that there was “above- Switzerland over 2016. Test ratio up 35 percentage points to 228 average” expansion of premiums in health, Swiss Mobiliar was the second largest percent. However, the improvement could property, motor and accident insurance. writer of direct insurance in Switzerland be largely attributed to a change in the Swiss health insurance premiums rose over the year, booking CHF2.70bn in method the regulator uses to calculate by 3.7 percent to CHF10.23bn. Fire and premiums and taking a 15.3 percent slice of solvency. property cover remained flat at CHF4.03bn. the market. Global insurer Zurich is also a Under the previous regime, the Swiss Rapid growth was seen in smaller major player in the local market and wrote insurers would have scored 202 percent. lines such as financial cover and tourist CHF2.53bn in gross premiums over 2016, For the total Swiss (re)insurance market, assistance, which grew by 9.3 percent and representing a 14.3 percent share. including life, non-life and reinsurance, 11.7 percent respectively to CHF379mn and Overall, claims for non-life insurers the solvency ratio rose by 22 percentage CHF233mn. “remained stable”, according to Finma, in a points, according to the Swiss Solvency Insurance for legal expenses increased by year that saw no major natural catastrophe Test. 6.5 percent to CHF584mn. events in Switzerland. Total claims paid fell by 0.3 percent to CHF74.9bn. Market shares of non-life insurers Overall investment gains by Swiss Company Booked premiums Market share Booked premiums Market share carriers – an aggregate figure including 2016 (CHF '000) 2016 (%) 2015 (CHF '000) 2015 (%) life, non-life and reinsurance – dropped by Axa Insurance Ltd 3,271,711 18.5% 3,250,944 18.6% 18.2 percent to CHF17.84bn. Total gross Swiss Mobiliar Insurance Company Ltd 2,698,677 15.3% 2,630,174 15.1% premiums for the entire market were up 6.1 Zurich Insurance Company Ltd 2,530,051 14.3% 2,572,663 14.7% percent to CHF131bn. Allianz Suisse Insurance Company Ltd 1,810,305 10.3% 1,766,805 10.1% Annual profits for the aggregate market fell by 27.4 percent to CHF11.0bn. The Helvetia Insurance Company Ltd 1,491,238 8.5% 1,496,090 8.6% Bern-based regulator attributed the fall in Baloise Insurance Company Ltd 1,289,753 7.3% 1,291,036 7.4% profits to “one-off effects in the reinsurance Vaudoise Insurance Company Ltd 869,011 4.9% 822,693 4.7% sector in 2015”. Generali Insurance Company Ltd 790,437 4.5% 775,183 4.4% Total market investments grew by 3 Eight largest insurance companies 14,751,183 83.6% 14,605,588 83.7% percent in 2016, but reinsurers grew Source: Finma investment portfolios more significantly, putting 11 percent more capital to work in 2016 than in the year before. Premiums earned by reinsurers Capital allocations remained stable across Category 2015 (CHF '000) 2016 (CHF '000) % change Y/Y % of total 2016 the Swiss market, with bonds making up Short-tail 13,021,868 14,859,282 14.1% 35.5% half of (re)insurers’ portfolios. Long-tail 9,911,836 14,010,941 41.4% 33.5% Equities and other riskier asset classes Catastrophes 2,719,958 2,615,418 -3.8% 6.2% remained a minimal feature of Swiss investment holdings. Equities made up Total non-life 25,653,662 31,485,641 22.7% 75.2% 3 percent of assets allocated in 2016 Life 6,868,586 10,382,567 51.2% 24.8% compared to 2 percent the year before. Total net premiums 32,522,248 41,868,208 28.7% 100% Alternative investments and derivatives Asia Pacific 10,035,990 11,200,450 11.6% 26.8% made up 2 percent and 1 percent of Europe 9,153,850 9,762,367 6.6% 23.3% insurers’ allocations respectively – the same North America 11,713,008 19,129,840 63.3% 45.7% allocation as the previous year. Non-life insurers had the strongest Rest of world 1,619,400 1,775,551 9.6% 4.2% investment returns in 2016 at 4.44 percent, Source: Finma up from 3.36 percent in 2015.

10 DAY 2: MONDAY

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Sound the reveille! Denis Kessler is one of (re)insurance’s larger-than-life characters. Here, the professor-turned-reinsurance CEO discusses the impact of a catastrophe-strewn third quarter on Baden-Baden discussions, Brexit and InsurTech

his is a serious wake-up call. It’s bananas or the reverse according to your continuity with our retrocessionnaires. “Tlike a near-death experience, when preferences,” he added. Being well protected in such situations is an you don’t die but you see the bullet pass Monsieur Kessler is not one for mincing his integral part of our capital shield strategy. close to your head for a second time, two words. “So I expect our discussions with our years in a row.” The aforementioned wake-up call refers retrocessionnaires will not be different So begins a stereotypically bombastic to the impact the recent hurricanes Harvey, from what they used to be,” he says, adding conversation with Scor’s CEO and chairman Irma and Maria are likely to have on renewal that he expected his peers’ books to be hit Denis Kessler. negotiations at 1 January and beyond. harder in relative terms than Scor’s. Kessler is a man who is not shy about Kessler believes the reverberations from speaking his mind – in September 2011, he this Q3 2017 season will be felt for months Underinsurance, told French newspaper Les Echos that an to come. Brexit and InsurTech implosion of the Eurozone could no longer “What is truly severe in reinsurance Away from what could well turn out to be be ruled out, and that even the strongest is a series of destructive events. Three the worst quarter on record for natural countries in the Eurozone could become catastrophes in a row is rare – and it’s catastrophes, Kessler is keen to talk about hostile to the euro currency. something which will affect the market,” he the protection gap – not just in emerging Then in June 2014, he told the says. markets but also in the more developed International Insurance Society’s 50th “The issue is that the total insured cost of nations. annual seminar that central banks were this series of events will most likely exceed “The question of protection against “ruining the (re)insurance industry”, called the amount of annual premium of the US cats has, in general, gone to the level of the prolonged low interest rate policy P&C reinsurance market – across all business many boards, as this is a strategic issue. a “disaster” and described reinsurers as lines – which is representing close to half Do we have adequate covers in place “collateral victims”. of the annual premium of the global P&C to be well protected? Did we check our Also, don’t let the heavy Alsace accent fool reinsurance market. And it is expected that counterparties? Is our business continuity you – Kessler has a masterful grasp of the more than 60 percent of the total insured plan ok? And so on. English language. cost will be transferred to reinsurance.” “There are still many people who remain Take this pearl from his discussions a Scor’s own losses appear to have been underinsured – look at Texas, an extremely few years ago on how cushioned by its retro providers and its cat rich part of the world, and we discover [after to compose a book bonds. Hurricane Harvey] that in some counties, of reinsurance The French reinsurance giant reported up to 85 percent of people are not insured business: “Portfolio a post-tax EUR430mn ($508mn) net against flood risk. Each time there’s a big management is cost from the HIM hurricanes and catastrophe, what we find is that the level like composing the two earthquakes that hit of underinsurance – what we call the a fruit basket. Mexico in September. Jeffries protection gap – is striking,” he opines. You like analyst Philip Kett noted the “The risk awareness is growing. I expect differently day after Scor’s disclosure that that the demand for insurance and each fruit in its retrocession arrangements reinsurance will increase, both quantitatively the basket,” he had saved the carrier as much as and qualitatively.” said. EUR520mn pre-tax, reducing its Kessler describes underinsurance as “a “You losses by more than 44 percent. major issue to be addressed in the years to sometimes Without discussing the specifics, come”, noting that the solution will come have to accept Kessler talks at length about the from a combination of government policies the minimum time spent developing Scor’s retro on the one hand, and the efforts and kiwis to get the programme. commitment of the private insurance and maximum “At Scor we’ve been a strategic reinsurance industry on the other. retro buyer for the past 15 “The protection gap is a worldwide years and we’ve issue, not only for emerging but also for always developed countries, and it will be solved favoured through the development of new insurance business and reinsurance products, public-private partnerships, but also investments in infrastructure to increase resilience to cat events. Addressing the protection gap is a key priority for the 21st century,” he says.

Continued on page 15

DAY 2: MONDAY 13 Interview

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Continued from page 13 “When we look at InsurTechs today, most for the one and only book of the Pope. of them are looking at insurance solutions, Italian escapes aside, Kessler is intensely One of the great topics du jour at Baden- not reinsurance solutions. Primary insurers proud of his children and their academic Baden this year will undoubtedly be the are trying to find new ways to access clients, successes. Indeed, on the day of our impending Brexit, and how that will affect or to add services – they are far more interview, his daughter was presenting her (re)insurance relationships. concerned with InsurTechs than reinsurers,” PhD at the London School of Economics. Kessler once again shoots from the hip, Kessler says. Despite a four-year extension to his noting that from an economic point of view, contract in April this year, rumours of “Brexit was an error”. Kessler’s future retirement date have “I respect of course the choice of British I expect that the become one of those perennial Baden- citizens, but as an economist, and as the demand“ for insurance and Baden discussion points. CEO of a group which operates in the reinsurance will increase, The former economist could go back UK, I have the strong conviction that this both quantitatively and to teaching – he was happily a professor development will be negative and that its for 15 years before finding his calling in cost will be high, irrespective of what the qualitatively reinsurance. final arrangement will look like,” he says. ” One thing’s for sure: when he does finally “Open markets create optimal business decide to step away, this industry will conditions, so free trade, freedom of access “For reinsurance, it’s different. First it certainly miss him. and freedom of establishment are key. In means new clients, as these new players order not to increase regulatory barriers need technical support and capital from – and costs – to operate and write cross- risk carriers backing them; and second, Denis Kessler biography border business between the EU and the we are extremely well placed to integrate UK, it is essential that there is no divergence new technologies, such as blockchain 1982-90: Director of a research going forward between the solvency and and artificial intelligence (AI), to optimise team at the CNRS national scientific prudential regimes in the EU and that of the our operations. At Scor we recently held research centre UK .” a conference on AI, which we believe will He notes the number of carriers that have allow us to improve the way we do business 1985-1992: President of the relocated or set up offices in Continental and to reduce costs.” Foundation for Economic and Financial Europe, a development which he says is a One of the other areas where Scor is Research loss – and a pity – for the UK. proving an innovator is Iran, as one of Scor already has a direct operation in the first major reinsurers to re-enter the 1988-89: Associate Professor of the UK, and, in view of the uncertainties country’s reinsurance market following the Economics at Nancy II University linked to Brexit, has decided to create rollback of EU sanctions. a P&C insurance company in France to “We used to be the leading reinsurance 1990-2002: President of the French serve its continental primary clients, while player in Iran before the US and EU Federation of Insurance Companies maintaining the insurance company Scor UK sanctions were introduced. It’s a market we (FFSA) for its other clients. know well, and which we are happy to start Kessler is equally as effusive on the topic supporting again,” he explains. of InsurTech. Scor has made considerable He is conscious of the uncertain 1994-1998: President of the Economic strides in this space. It is a founding member geopolitical landscape, however, and adds Commission of the MEDEF, in charge of blockchain initiative B3i, bought the that the policy terms of the new treaties of economic and international affairs majority of marketing and distribution include a clause to ensure that the contracts platform ReMark in 2007, and recently are fully compliant with regulations (and 1997-98: CEO and member of the expanded its investment in research and sanctions) at all times. Executive Committee of the Axa Group development by partnering with InsurTech accelerator Plug and Play. That’s amore 1998-2002: Executive vice president The Scor CEO calls the recent explosion of As our time draws to a close, the of the MEDEF interest a “market positive for reinsurance”, conversation turns to Kessler’s life outside but condemns the lack of progress in this of work. Those close to him will know of 2000: Knight of the National Order of space. his love of all things Italian: his passion the Legion of Honour “New technologies and InsurTechs are for opera and classical music, and a good putting pressure on risk traders, as they are Campari and soda. Since 2002: Chairman and CEO of the contesting their business model in terms Indeed, when asked which his favourite Scor Group of distribution and intermediation. On the city is to visit, he unquestioningly replies: contrary, the risk carrier business model “Roma.” Since 2016: Member of the Academy is more immune to this contestability, “I’d like to be drinking a Campari and soda of Moral and Political Sciences as barriers to entry have increased with a slice of orange looking down on the dramatically, be it in terms of capital Vatican.” Since July 2016: President of requirements, regulatory reporting or even Interestingly, one of Scor’s lesser known the Association of Reinsurance in terms of relative profitability compared to investments is in a French publisher that has Professionals in France (Apref) other sectors. just acquired the exclusive worldwide rights

DAY 2: MONDAY 15

analysis

Insurance stocks rise in Q3 despite losses e)insurance stocks climbed by contracted by 0.7 percent for the period. The winners (R3.8 percent in the third quarter However, our index lagged behind the S&P Among global reinsurers, Munich Re took as investors gave a vote of confidence 500, which climbed by 4.0 percent in Q3, the crown with a 2.5 percent quarterly in carriers’ balance sheets despite the and the Dow Jones US Nonlife Insurance share price increase to close September at onslaught of natural catastrophes composite, which was up by 4.5 percent. EUR180.90 per share. However, that only that threatened to wipe out the year’s That growth looks impressive against the made up for the ground lost when the reinsurance premiums. backdrop of significant Q3 losses, which by hurricane season began to strike the US The Insurance Insider’s index of 50 P&C some estimates could put 2017 among the and the Caribbean. For the year to date, the (re)insurance companies, The Insider 50, costliest years on record for insurers. German reinsurance giant was relatively flat outpaced most major indices in the third Speaking at sister publication Reactions’ with only 1.1 percent stock growth. quarter. North America Re/Insurance Conference last Across the border, French carrier Scor The sector beat the Stoxx Euro 600, which month Jean-Paul Conoscente, president and posted a 2.2 percent increase in its share climbed by 2.3 percent, and was well ahead CEO of Scor US, said the bill for hurricanes price to EUR35.47 in Q3 after also suffering a of the FTSE 100, which was up just 0.8 Harvey, Irma and Maria alone could total dent during September’s hurricane season. percent for the period. $150bn. Nevertheless, the company’s share price The Insider 50 was also ahead of the “The industry writes about $150bn of was up 8.1 percent in the year to date – the S&P 500 Insurance index, which grew by reinsurance worldwide, so basically we strongest growth among the global reinsurer 2.5 percent, and the Dow Jones US P&C wiped out one year of premium for the peer group. The two reinsurers were the Insurance composite, which climbed 1.3 whole reinsurance industry,” he said. Continued on page 19 percent. And it far outpaced the FTSE 350 Nonlife Insurance Sector index, which Novae wins the quarter while Bermudians sink Insider 50 outpaces most NovaeNovae wins winsthe quarter the quarter while Bermudians while Bermudians sink sink Insider 50 outpaces most InsiderInsider 50 50 outpaces outpaces most most market indices in Q3 Novae wins the quarter while Bermudians sink Novae +25.3% market indices in Q3 Novae +25.3% marketmarket indices indices in Q3 in Q3 Fairfax +15.5% Dow Jones US Novae +25.3% +4.5% Third Point Re +12.2% Fairfax Nonlife Insurance +15.5% Dow Jones US Fairfax +15.5% Dow Jones US Nonlife Insurance +4.5% +4.5%Enstar +11.9% Third Point Re S&P 500 +12.2% +4.0% Third Point Re +12.2% Nonlife Insurance Enstar +11.9% S&P 500 +4.0% Enstar +11.9% S&P 500 Brown+4.0% & Brown +11.9% The Insider 50 +3.8% Insider 50 +3.8% Brown & Brown +11.9% The Insider 50 +3.8% Brown & Brown +11.9% The Insider 50 +3.8% S&P 500 Insurance +2.5% Insider 50 +3.8% Insider 50 +3.8% -11.4% Axis S&P 500 Insurance +2.5% S&P 500 Insurance +2.5% Stoxx Euro 600 +2.3% -11.4% Axis -15.2% QBE -11.4% Axis Stoxx Euro 600 +2.3% Dow Jones US Stoxx Euro 600 +2.3% -15.2% QBE -18.6% HCI -15.2% QBE +1.3% Dow Jones US P&C Insurance Dow Jones US -18.6% HCI +1.3% -18.6% HCI +1.3% P&C Insurance -19.0% Aspen FTSE 100 +0.8% P&C Insurance -19.0% Aspen -28.4% FTSE 100 +0.8% Maiden Holdings-19.0% Aspen FTSE 100 +0.8% -0.7% FTSE 350 Nonlife Insurance Sector -28.4% Maiden Holdings -28.4% Maiden Holdings -30-0.7% FTSE-20 350 Nonlife Insurance-10 Sector 0 10 20 30 -0.7% FTSE 350 Nonlife Insurance Sector -30 -20 -10 0 10 20 30 -1 0 1 2 3 4 5 -1 0 1 2 3 4 Q35 share price change-30 (%) -20 -10 0 10 20 30 Q3 share price change (%) % change -1 0 1 2 3 4 5 Source: The Insurance Insider% change Q3 share price change (%) Source: The Insurance Insider % change Source: The Insurance Insider Source: The Insurance Insider Source: The Insurance Insider Source: The Insurance Insider

P&C insurance stocks start recovering after hurricaneP&C insurance seasonP&C stocks insurance start recovering stocks startafter firstrecovering half of hurricane after hurricane season season P&C insurance stocks start recovering after hurricane season Bermuda London carriers Global reinsurers US specialty US nationwides Global insurers 1,300 Bermuda London carriers Global reinsurers US specialty US nationwides Global insurers 1,300 Bermuda London carriers Global reinsurers US specialty US nationwides Global insurers 1,250 1,300 1,250 1,200 1,250 1,200 1,150 1,200 1,150 1,100 1,150 1,050 1,100

Index points 1,100 1,000 1,050 Index points 1,050 950 1,000 Index points 1,000 900 950 950 02-Jul04-Jul06-Jul08-Jul10-Jul12-Jul14-Jul16-Jul18-Jul20-Jul22-Jul24-Jul26-Jul28-Jul30-Jul 900 30-Jun 01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug02-Sep04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep 900 Source: The Insurance Insider 02-Jul04-Jul06-Jul08-Jul10-Jul12-Jul14-Jul16-Jul18-Jul20-Jul22-Jul24-Jul26-Jul28-Jul30-Jul 30-Jun 01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug02-Sep04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep 02-Jul04-Jul06-Jul08-Jul10-Jul12-Jul14-Jul16-Jul18-Jul20-Jul22-Jul24-Jul26-Jul28-Jul30-Jul Source: The Insurance Insider 30-Jun 01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug02-Sep04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep Bermuda index in the red Global insurers mostly Source: The Insurance Insider down in the quarter Arch +5.6% Bermuda index in the red Global insurers mostly -2.8% RenRe +9.8% Bermuda index in the red Global insurers mostly Allianz DAY 1: SUNDAY down in the quarter 17 -4.2% Bermuda index Generali +9.3% Arch +5.6% down in the quarter -5.3% Validus Axa +6.7% Arch +5.6% -2.8% RenRe Allianz +9.8% -9.9% XL Catlin Zurich +6.0% -2.8% RenRe Allianz +9.8% -4.2% Bermuda index Generali +9.3% -11.4% Axis Global insurers index +4.5% -4.2% Bermuda index Generali +9.3% Talanx +4.4% -5.3% Validus Axa +6.7% -19.0% Aspen -5.3% Validus Axa +6.7% -1.8% AIG -9.9% XL Catlin Zurich +6.0% -25 -20 -15 -10 -5 0 5 10 -9.9% XL Catlin Zurich +6.0% Q3 share price change (%) -2.0% Chubb -11.4% Axis Global insurers index +4.5% -11.4% Axis Global insurers index +4.5% Source: The Insurance Insider -5.4% TMK -19.0% Aspen Talanx +4.4% -9.9% -19.0% Aspen Talanx +4.4% Mapfre -25 -20 -15 -10 -5 0 5 10 -1.8% AIG -15.2% QBE -1.8% AIG Markel leads Q3 share price change (%) -25 -20 -15 -10 -2.0%-5 0Chubb5 10 -20 -15 -10 -5 0 5 10 15 Q3 share price change (%) -2.0% Chubb Source: The Insurance Insider -5.4% TMK Q3 share price change (%) -5.4% TMK US specialty insurers Source: The Insurance-9.9% Insider Mapfre Source: The Insurance Insider -9.9% Mapfre -15.2% QBE Markel +9.4% Markel leads -15.2% QBE +9.4% Fairfax up 16% in Q3 -20 -15Markel-10 -5 leads0 5 10 15 The Hanover -20 -15 -10 -5 0 5 10 15 Navigators +6.3% Q3 share price change (%) US specialty insurers Q3 share price change (%) RLI +5.0% Fairfax +15.5% Source:US Thespecialty Insurance Insider insurers Source: The Insurance Insider James River +4.4% Third Point Re +12.2% Markel +9.4% AFG +4.1% Enstar +11.9% Markel +9.4% The Hanover +9.4% Fairfax up 16% in Q3 US specialty index +3.9% The Hartford +5.4% The Hanover +9.4% Fairfax up 16% in Q3 Argo +1.5% Allstate +3.9% Navigators +6.3% NavigatorsFairfax +6.3% +15.5% -3.5% WR Berkley Greenlight Re +3.6% RLI +5.0% RLI +5.0% Fairfax +15.5% -11.1% AmTrust CNA +3.1% James River +4.4% Third Point Re +12.2% James River +4.4% Third Point Re +12.2% -15 -10 -5 0 5 10 15 -3.2% Travelers AFG +4.1% Enstar +11.9% AFG +4.1% Enstar +11.9% Q3 share price change (%) -6.9% Alleghany US specialty index +3.9% The Hartford +5.4% US specialty index +3.9% The Hartford +5.4% Source: The Insurance Insider -10 -5 0 5 10 15 20 Argo +1.5% Allstate +3.9% Argo +1.5% Allstate +3.9% Q3 share price change (%) -3.5% WR Berkley Greenlight Re +3.6% -3.5% WR Berkley Greenlight Re +3.6% Beazley lags behind Source: The Insurance Insider -11.1% AmTrust CNA +3.1% -11.1% AmTrust CNA +3.1% -15 -10 -5 0 5 10 15 -3.2% Travelers peers in London -15 -10 -5 0 5 10 15 -3.2% Travelers Q3 share price change (%) -6.9% Alleghany Brown & Brown wins Q3 share price change (%) -6.9% Alleghany Novae +25.3% Source: The Insurance Insider -10 -5 0 5 10 15 20 the quarter for brokers Source: The Insurance Insider -10 -5 0 5 10 15 20 Q3 share price change (%) Hiscox +1.8% Q3 share price change (%) Source: The Insurance Insider Brown & Brown +11.9% Beazley lags behind Source: The Insurance Insider -0.9% London carriers index Beazley lags behind Aon +9.9% -1.8% Beazley peers in London peers in London AJ Gallagher +7.5% Brown & Brown wins Brown & Brown wins -4.5% Lancashire Novae +25.3% MMC +7.5% Novaethe quarter for brokers+25.3% -10 -5 0 5 10 15 20 25 30 the quarter for brokers WTW +6.0% Hiscox +1.8% Q3 share price change (%) Hiscox +1.8% Brown & Brown +11.9% Source: The Insurance Insider JLT +1.9% -0.9% London carriers index Brown & Brown +11.9% -0.9% London carriers index 0 2 4 6 8 10 12 14 Aon +9.9% -1.8% Beazley Aon +9.9% Q3 share price change (%) -1.8% Beazley AJ Gallagher +7.5% Source: The Insurance Insider AJ Gallagher +7.5% Everest Re falls -4.5% Lancashire -4.5% MMCLancashire +7.5% to the bottom -10 -5 0 5 10 15 20 25 30 MMC +7.5% -10 -5 0WTW5 10 15 +6.0%20 25 30 Q3 share price change (%) Q3 share price change (%) WTW +6.0% Munich Re +2.5% Source: The Insurance Insider JLT +1.9% Source: The Insurance Insider JLT +1.9% Scor +2.2% 0 2 4 6 8 10 12 14 0 2 4 6 8 10 12 14 Q3 share price change (%) Global Re index +1.0% Q3 share price change (%) Source: The Insurance Insider Source: The Insurance Insider -0.1% Swiss Re Everest Re falls Everest Re falls -3.0% Hannover Re to the bottom to the bottom -10.3% Everest Re Munich Re +2.5% Munich Re +2.5% -12 -10 -8 -6 -4 -2 0 2 4 Q3 share price change (%) Scor +2.2% Scor +2.2% Source: The Insurance Insider Global Re index +1.0% Global Re index +1.0% -0.1% Swiss Re -0.1% Swiss Re

-3.0% Hannover Re -3.0% Hannover Re

-10.3% Everest Re -10.3% Everest Re -12 -10 -8 -6 -4 -2 0 2 4 -12 -10 -8 -6 -4 -2 0 2 4 Q3 share price change (%) Q3 share price change (%) Source: The Insurance Insider Source: The Insurance Insider analysis

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CCR Caisse Centrale de Réassurance @CCR_Reassurance CCR Caisse Centrale de Réassurance

www.ccr.fr

CCR ™ - Caisse Centrale de Réassurance - 157 boulevard Haussmann 75008 Paris - France Tél. : +33 1 44 35 31 00 - http://www.ccr.fr - Société Anonyme au capital de 60 000 000 € - 388 202 533 RCS Paris Novae wins the quarter while Bermudians sink Insider 50 outpaces most market indices in Q3 Novae +25.3% Fairfax +15.5% Dow Jones US +4.5% Third Point Re +12.2% Nonlife Insurance Enstar +11.9% S&P 500 +4.0% Brown & Brown +11.9% The Insider 50 +3.8% Insider 50 +3.8% S&P 500 Insurance +2.5% -11.4% Axis Stoxx Euro 600 +2.3% -15.2% QBE Novae wins the quarter while Bermudians sink Insider 50 outpaces most Dow Jones US +1.3% -18.6% HCI Novae wins the quarterP&C Insurance while Bermudians sink Insidermarket 50 indices outpaces in Q3 most -19.0% Aspen Novae FTSE 100 +0.8% +25.3% Insider 50 outpaces most -28.4% Maiden HoldingsNovae wins the quarter while Bermudians sink market indices in Q3 FairfaxNovae-0.7% FTSE 350 Nonlife+15.5% Insurance Sector +25.3% Dow Jones US +4.5% -30 -20 -10 0 10 20 Third30 Point Re +12.2% Nonlifemarket Insurance indices in Q3 NovaeFairfax -1 0 1 2 3+15.5%4 5 +25.3% Dow Jones US Q3 share price change (%) Novae wins the quarter while Bermudians sink InsiderS&P 50 500 outpaces most +4.0%+4.5% ThirdEnstar Point Re % change+11.9%+12.2% Nonlife Insurance Source: The Insurance Insider Fairfax +15.5% Dow Jones US Brown & BrownSource: The Insurance Insider +11.9% marketS&P indices 500 in Q3 +4.0%+4.5% Third PointEnstarNovae Re +12.2%+11.9% +25.3% NonlifeThe Insider Insurance 50 +3.8% Insider 50 +3.8% Insider 50 outpaces most Novae wins theBrown quarter & EnstarBrownFairfax while Bermudians+11.9%+11.9%+15.5% sink S&PDow 500 JonesThe Insurance US InsiderS&P 500 50 +2.5% +4.0%+3.8% Nonlife Insurance +4.5% -11.4% ThirdInsider Point 50 ReAxis +3.8% +12.2% Insidermarket 50 outpaces indices in most Q3 Novae wins the quarterBrown & Brown while Bermudians+11.9% sink S&PStoxxThe 500 Euro Insider Insurance 600 50 +2.3%+2.5% +3.8% -15.2% NovaeEnstarQBE +11.9% +25.3% S&P 500 +4.0% P&C insurance stocks start recovering-11.4% after hurricaneInsider 50 Axis season+3.8% Fairfax +15.5% marketS&PDow 500 Jones Insurance indices US in Q3+2.5% -18.6% BrownNovae & BrownHCI +11.9% +25.3% TheDow Insider JonesStoxx 50 US Euro 600 +1.3% +3.8%+2.3% -15.2%-11.4% AxisQBE NonlifeP&C Insurance Insurance +4.5% Third PointInsider Re 50 +3.8% +12.2% -19.0% Fairfax Aspen +15.5% StoxxDow Euro Jones 600 US +1.3%+2.3% Bermuda London carriers Global reinsurers-18.6%-15.2%US specialty US nationwidesQBEHCI Global insurers S&PDow 500 Jones InsuranceS&PP&C USFTSE 500 Insurance 100 +0.8%+2.5% +4.0% 1,300 -11.4% Enstar Axis +11.9% Nonlife Insurance +4.5% -28.4% -19.0% Third Point Re MaidenAspen Holdings+12.2% Stoxx EuroDow 600 Jones US +2.3%+1.3% -18.6% -15.2% Brown & Brown HCIQBE +11.9% The InsiderP&C-0.7% Insurance 50FTSE 100FTSE 350+0.8% Nonlife Insurance+3.8% Sector 1,250 Enstar +11.9% S&P 500 +4.0% -28.4%-30 -20 -10 0 Maiden Holdings10 20 30 Dow Jones US +1.3% -19.0%-18.6% Insider 50 AspenHCI +3.8% P&C InsuranceFTSE-0.7%-1 1000 FTSE1 +0.8% 3502 Nonlife3 Insurance4 Sector5 1,200 BrownQ3 & Brown share price change (%) +11.9% S&PThe 500 Insider Insurance 50 +2.5%+3.8% -28.4%-30 -20-19.0% -11.4% -10 0AxisMaidenAspen Holdings10 20 30 FTSE 100 +0.8% % change Insider 50 +3.8% -0.7%-1 0FTSE 3501 Nonlife2 Insurance3 4 Sector5 1,150 Source: The Insurance Insider S&P 500Stoxx Insurance Euro 600 +2.5%+2.3% -30-28.4% -20 -15.2% -10 Q3 share price0QBEMaiden change Holdings (%)10 20 30 Source: The Insurance Insider -11.4% Axis Dow-0.7% Jones US FTSE 350 Nonlife% Insurance change Sector Source: The Insurance Insider -1 0 +1.3%1 2 3 4 5 1,100 -30 -18.6%-20 -10Q3 share price0HCI change (%)10 20 30 StoxxP&C Euro Insurance 600 +2.3% -15.2% QBE Source:-1 The 0Insurance1 Insider2 % change3 4 5 Source: The Insurance -19.0%Insider Q3 share priceAspen change (%) analyDowsis JonesFTSE US 100 +0.8% 1,050 -18.6% HCI %+1.3% change Index points -28.4%Source: The Insurance Insider Maiden Holdings P&C InsuranceSource: The Insurance Insider Source: The-0.7% Insurance InsiderFTSE 350 Nonlife Insurance Sector 1,000 -19.0% Aspen FTSE 100 +0.8% -30 P&C-20 insurance-10 stocks0 start10 recovering20 after30 hurricane season -28.4% Maiden Holdings -1 0 1 2 3 4 5 950 P&C insuranceQ3 share stocks price change start (%) recovering after hurricane-0.7% FTSE 350 season Nonlife Insurance Sector -30 -20 -10 0 10 20 30 % change Continued900 from page 17 Elsewhere,Source: The shares InsuranceBermuda Insiderin Aspen fell Londonby almost carriers estimateGlobal pegged reinsurers the syndicate’sUS specialty Harvey andUS nationwides -1 0 1 2Global3 insurers4 5 1,300 P&C insuranceQ3 share price stocks change (%) start recovering after hurricaneSource: The Insurance Insider season P&C insurance stocks start recovering after hurricane season% change a fifthSource: in The theInsurance third Insider Bermudaquarter. The shareLondon price carriersIrma lossesGlobal at reinsurers around $225mn.US specialty The carrier US nationwides Global insurers 02-Jul04-Jul06-Jul08-Jul10-Jul12-Jul14-Jul16-Jul18-Jul20-Jul22-Jul24-Jul26-Jul28-Jul30-Jul 1,300 30-Jun 01-Aug03-Aug1,25005-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug02-Sep04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep Source: The Insurance Insider main drivers behind the 1.0 percent rise in had been trending downwardsBermuda sinceLondon late carriersfinishedGlobal the reinsurers reinsurers quarter tradingUS specialty up 1.8 percent.US nationwides Global insurersGlobal insurers Source: The Insurance Insider 1,300 Bermuda London carriers US specialty US nationwides our Global Reinsurers index to 1,066.6 index July,1,200 1,3001,250but it hit a low for the quarter in early Meanwhile, fellow Lloyd’s syndicate 1,250 P&C insurance stocks start recovering after hurricane season points in Q3. September1,1501,2501,200 while Irma was bearing down on Beazley and its peer Lancashire were Global1,200 insurers mostly TheBermuda biggest beneficiary index inof investor the red Florida,1,1001,2001,150 which causedP&CBermuda the insurance stock to fallLondon almost stocks carriers trading startGlobal downrecovering reinsurers by 1.8 percentUS after specialty and 4.5hurricane percent,US nationwides seasonGlobal insurers 1,3001,150 confidence was London-listed Novae. Its 20 percent.1,150down in the quarter respectively. Arch +5.6% 1,0501,1001,250 stock climbed more than 25 percent during Index points 1,100 Bermuda London carriers TheGlobal Bermudians reinsurers appearUS specialty to have sufferedUS nationwides Global insurers -2.8% RenRe 1,3001,100 1,0001,0501,200 Allianz +9.8% the quarter after agreeing to a takeover LondonIndex points 1,050 languishes the brunt of the pain, with our Bermuda -4.2% Bermuda index 1,250 Index points 1,0501,000 Generali +9.3% bid from Axis, which the Bermudian TheIndex points 950picture1,1501,000 was more mixed for layers in index down 4.2 percent in Q3. The worst- -5.3% Validus 1,200 Axa +6.7% sweetened to £477.6mn ($644.8mn) at the London,1,000 where Lloyd’s predicted a $4.5bn affected carrier was Aspen, which fell almost -9.9% XL Catlin 9009501,100950 Zurich +6.0% end of August. Novae delisted on 3 October, loss1,150 from Harvey and Irma alone. 20.0 percent, while Axis was down 11.4 -11.4% Axis Global9509001,050900 insurers index +4.5% making this its last appearance in The Insider Hiscox1,10030-JunIndex points 02-Jul shares04-Jul06-Jul08-Jul had10-Jul been12-Jul14-Jul on16-Jul 18-Jula+4.4% downward20-Jul22-Jul24-Jul26-Jul 28-Jul30-Julpercent and XL Catlin by just under 10.0 02-Sep04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep -19.0% Aspen 9001,000 Talanx 01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug Source: The Insurance30-Jun02-Jul Insider04-Jul06-Jul08-Jul10-Jul12-Jul14-Jul16-Jul18-Jul20-Jul22-Jul24-Jul26-Jul28-Jul30-Jul 50 composite. path1,050 before30-Jun02-Jul the04-Jul06-Jul storms,-1.8%08-Jul10-Jul12-Jul butAIG14-Jul they16-Jul18-Jul rebounded20-Jul22-Jul24-Jul26-Jul 28-Jul30-Julpercent.01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug02-Sep04-Sep06-Sep02-Sep08-Sep04-Sep10-Sep06-Sep12-Sep08-Sep14-Sep10-Sep16-Sep12-Sep18-Sep14-Sep20-Sep16-Sep22-Sep24-Sep18-Sep26-Sep20-Sep28-Sep22-Sep24-Sep26-Sep28-Sep

-25 -20 -15 -10 -5 0 5 10 Index points 01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug Source:950 The Insurance Insider Fairfax was among the other industry andSource: continued The02-Jul Insurance04-Jul 06-Julto Insider 08-Jul-2.0%rise10-Jul after12-JulChubb14-Jul a16-Jul provisional18-Jul20-Jul22-Jul24-Jul loss26-Jul28-Jul 30-Jul Q3 share price change (%) 1,00030-Jun 01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug02-Sep04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep darlingsSource: The as Insurance shares Insider in the Canadian 900 -5.4% TMK Source:950 The Insurance Insider GlobalGlobal insurers insurers mostly mostly Bermuda-9.9% indexMapfre in the red Global insurers mostly investment conglomerate went up more BermudaBermuda02-Jul04-Jul index06-Jul08-Jul 10-Julindex12-Jul in14-Jul the16-Jul in18-Jul redthe20-Jul22-Jul 24-Julred26-Jul28-Jul30-Jul 900 30-Jun 01-Aug03-Aug05-AugGlobal07-Aug09-Aug11-Aug13-Aug insurers15-Aug17-Aug19-Aug21-Aug23-Aug25-Aug mostly27-Aug29-Aug31-Aug02-Sep 04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep than 15 percent during the period. -15.2%Bermuda indexQBE in the red downdown in the in thequarter quarter Markel leads Source: The Insurance Insider Arch +5.6% down in the quarter -20Bermuda-15 -10 -5index0 inArch5 the10 red+5.6%15 Global insurers mostly The third quarter was also positive across 30-Jun02-Jul04-Jul06-Jul08-Jul10-Jul-2.8%12-Jul14-Jul16-Jul18-JulRenRe20-Jul22-Jul24-Jul26-Jul28-Jul30-Jul down in the quarter02-Sep04-Sep06-Sep08-Sep10-Sep12-Sep14-Sep16-Sep18-Sep20-Sep22-Sep24-Sep26-Sep28-Sep Q3 share price change-2.8%Arch (%)RenRe+5.6% 01-Aug03-Aug05-Aug07-Aug09-Aug11-Aug13-Aug15-Aug17-AugAllianz19-Aug21-Aug23-Aug25-Aug27-Aug29-Aug31-Aug+9.8%+9.8% the boardUS specialtyfor brokers. Brown insurers & Brown was Source: The Insurance Insider down in the quarter Source: BermudaThe Insurance Insider-4.2% index-2.8%-4.2%Arch BermudainRenRe theBermuda +5.6%index red index Global insurersGeneraliAllianz mostly+9.3%+9.3% +9.8% the biggest winner, climbing 11.9 percent. -5.3% -5.3% Validus +6.7% Markel +9.4% -4.2%-2.8% ValidusRenReBermuda index GeneraliAllianzAxaAxa +6.7%+9.8%+9.3% -9.9% XL Catlin down in the quarter+6.0% The Hanover +9.4% BermudaFairfax-9.9% upindex-5.3% -4.2%16% inArch inXLtheBermuda ValidusCatlin Q3 red+5.6% index Global insurersGeneraliZurichAxa mostly +6.0% +6.7%+9.3% The losers -11.4% -2.8% RenReAxis Global insurers index +4.5%+4.5% Navigators +6.3% -11.4%-9.9% -5.3% AxisValidusXL Catlin downGlobal insurersin theAllianz indexZurich quarterAxa +6.7%+6.0%+9.8% RLI +5.0% Fairfax-19.0% Aspen+15.5% Talanx +4.4% At the other end of the scale, Everest Re -19.0% -11.4%-9.9% -4.2%Arch AspenXLBermuda Catlin+5.6% index GeneraliTalanx +4.4%+4.5%+6.0%+9.3% Third Point Re +12.2%Axis Global insurers-1.8%Zurich indexAIG James River +4.4% -25 -20 -15 -2.8%-5.3%-10 -5RenReValidus0 5 10 -1.8% +6.7% closed the quarter down with a 10.3 percent -25 -19.0%-20 -15-11.4%-10 -5 0 AxisAspen5 10 Global insurersAllianz AxaTalanxindexAIG +9.8%+4.5%+4.4% AFG +4.1% Enstar Q3 share price change+11.9% (%) -2.0% Chubb decline in its share price to $228.39. Q3 share-9.9% -4.2%price changeBermuda (%)XL Catlin index Generali-2.0%Zurich -1.8% Chubb+6.0%+9.3%+4.4% US specialty index +3.9% -25The-19.0% Hartford-20Source: The-15 Insurance-10 Insider+5.4%-5 0Aspen5 10 -5.4% TalanxTMKAIG -11.4%-5.3% ValidusAxis Global insurers-5.4%Axa index +6.7%+4.5% The reinsurer’s stockArgo was+1.5% climbing steadily Source:-25 The-20 InsuranceAllstate-15Q3 Insider share-10+3.9% price-5 change0 (%)5 10 -9.9% -1.8%-2.0% MapfreTMKAIGChubb -19.0% -9.9% XL CatlinAspen ZurichTalanx +6.0%+4.4% up until mid-August,-3.5% when it began to +3.6% -15.2% -9.9% -5.4%-2.0% QBEMapfreChubbTMK WR Berkley Source:Greenlight The Insurance ReQ3 share Insider price change (%) -1.8% -25 -20-11.4%-15Markel-10 -5 leadsAxis0 5 10 -15.2%Global insurers index AIG+4.5% scale-11.1% back as the threatAmTrust of Hurricane Harvey Source: The InsuranceCNA Insider+3.1% -20 -15 -9.9%-10-5.4%-5 0 QBETMKMapfre5 10 15 MarkelQ3 share leads price change (%) Talanx-2.0% Chubb+4.4% -19.0%-3.2% Aspen -9.9%Q3 share price change (%) consolidated.-15 -10 That-5 led0 Everest5 Re’s10 share15 US specialtyTravelers insurers -20 -15.2%-15 -10-5.4% -5 0 MapfreQBE5 10 15 Source: The Insurance Insider Source: The Insurance-1.8% Insider AIGTMK Q3 share price change (%) -25-6.9% -20 -15MarkelAlleghany-10 -5 leads0 5 10 -15.2% Q3 share price changeQBE (%) price to drop by 9.5 percent in September US specialty insurers -20 -9.9%-15 -10-2.0% -5 Mapfre0 5 10 15 MarkelQ3Markel leads share priceMarkel changeleads (%) +9.4% Chubb Source: The Insurance Insider -10 -5 0 5 10 15 20 Source:-20-15.2% The -15Insurance-10 Q3Insider share-5 price0 change5 (%)10 15 alone. Nevertheless, on a year-to-date basis, Source: USThe Insurance specialty InsiderThe Hanover insurers+9.4% Fairfax-5.4% up 16%TMKQBE in Q3 Q3 shareMarkel price change leads (%) Source: The InsuranceQ3 share Insider price change (%) Everest Re’s stock was up 5.5 percent. USUS specialty specialtyMarkelNavigators insurers insurers+9.4%+6.3% -20 -9.9%-15 -10 -5 Mapfre0 5 10 15 Beazley lags behind Source: The InsuranceThe Hanover Insider +9.4% FairfaxSource:Fairfax The FairfaxInsurance up Insiderup16% 16% in Q1 in Q3+15.5% Hannover Re fell by 3.0 percent in US specialtyMarkel RLI insurers+5.0%+9.4% -15.2% Q3 share priceQBE change (%) Markel leads Source:Third The Point Insurance Re Insider +12.2% NavigatorsThe HanoverMarkelJames River +6.3%+4.4%+9.4%+9.4% -20 -15Fairfax-10 -5 up0 16%5 10 in 15Q3 the quarterpeers to EUR101.95 in London per share. The AFG +4.1% FairfaxEnstar +11.9% +15.5% BrownUS specialtyTheNavigators Hanover &RLI MarkelBrown insurers+5.0% wins+6.3%+9.4%+9.4% FairfaxQ3 share price up change 16% (%) in Q3 company’s stock dropped by 4.6 percent in JamesUS specialty River index +4.4%+3.9% ThirdTheFairfax Point HartfordFairfax Re up 16%+5.4% in +12.2%Q3 +15.5% Novae +25.3% NavigatorsThe HanoverRLI +5.0%+6.3%+9.4% Source: The Insurance Insider Argo +1.5% AllstateEnstar +3.9% +11.9% August alone. And Swiss Re was relatively the quarterJamesNavigatorsAFG RiverRLI for brokers+4.1%+4.4%+5.0%+6.3% Third PointFairfax Re +12.2%+15.5% Markel-3.5% WR Berkley+9.4% GreenlightFairfax Re +3.6%+5.4% +15.5% flat duringHiscox the +1.8%period at CHF87.65 per share. US specialtyJames index RiverAFGRLI +3.9%+4.4%+4.1%+5.0% TheThird Hartford PointEnstar Re +12.2%+11.9% -11.1%The Hanover AmTrust+9.4% FairfaxThird PointCNA Re up 16%+3.1% in Q3+12.2% Brown & Brown JamesArgo River+1.5% +4.4% +11.9% AllstateEnstar +3.9% +11.9% In our-0.9% widerLondon coverage carriers universe, index Maiden US specialtyNavigators indexAFG +4.1%+6.3%+3.9% The-3.2% Hartford +5.4% -15 -10 -5AFG 0 +4.1%5 10 15 Enstar Travelers +11.9% US specialty-3.5% indexArgoWR Berkley+1.5%+3.9% GreenlightTheFairfax HartfordAllstate Re +3.6%+3.9%+5.4% +15.5% was at the bottom of the barrel as its share Aon Q3RLI share price change+5.0% +9.9%(%) -6.9% Alleghany+5.4% -1.8% Beazley -11.1% US specialty index +3.9% The Hartford Source:James The-3.5% Insurance RiverArgo InsiderAmTrustWR+1.5% +4.4%Berkley Third PointGreenlight ReAllstateCNA Re +3.1%+3.9%+3.6%+12.2% price fell almost 30 percent during the AJ Gallagher Argo +1.5%+7.5% -10 Allstate-5 0 +3.9%5 10 15 20 -15 -11.1%-10 -3.5%-5 AFG0 WRAmTrust +4.1%Berkley5 10 15 Greenlight-3.2%Enstar ReTravelers+3.6%+3.1% +11.9% quarter.-4.5% The mainLancashire cause was a poor set of Q2 -3.5% WR Berkley GreenlightQ3 ReCNA share price+3.6% change (%) -11.1%US specialtyMMCQ3 share index price changeAmTrust+3.9%+7.5% (%) The-6.9%Source: Hartford The Insurance Insider +5.4% -15 -11.1%-10Beazley-5 0 lagsAmTrust5 behind10 15 -3.2%CNACNAAlleghanyTravelers+3.1%+3.1% results-10 that-5 sent0 the5 share10 15 price20 crashing25 30 by Argo +1.5% Allstate +3.9% Source:-15 -15The Insurance-10WTW-10Q3 Insider share-5 -5 price0 0 change+6.0%55 (%)1010 15 -10-6.9%-3.2%-3.2%-5 0TravelersTravelersAlleghany5 10 15 20 Q3 share price change (%) -3.5%peersWR in Berkley London Greenlight Re +3.6% more than a third in the days after they were Source: The InsuranceQ3Q3 share Insidershare price price change change (%) (%) -6.9%-6.9% Q3 shareAlleghanyAlleghany price change (%) Source: The Insurance Insider -11.1% JLT +1.9%AmTrust -10BrownCNA-5 &+3.1%0 Brown5 wins10 15 20 released. Source: The Insurance Insider Source: The Insurance Insider Source: The NovaeInsurance Insider +25.3% -10-10 -5-5 Q30 share0 5 price5 10change10 15 (%)15 20 20 -15 Beazley-10 0-5 2lags04 6behind5 8 10 12 1514 -3.2% Travelers Source:the The quarter InsuranceQ3Q3 share share Insider price price for change change brokers (%) (%) BeazleyQ3Hiscox share Q3price +1.8%sharelags change price behind (%) change (%) -6.9% Alleghany peers in London Source:Source: The The Insurance Insurance Insider Insider Everest Re falls Source:Source: The TheBeazley Insurance InsuranceBeazley Insider Insider lags lags behind behind -10 Brown-5 & Brown0 5 10 15 20+11.9% Everest Re falls -0.9% London carriers index Brown & Brown wins peers in London Q3 share price change (%) to the bottom LancashireNovaepeerspeers lags in in London Londonbehind +25.3% BrownBrownAon & Brown & Brown wins +9.9%wins to the bottom -1.8% Beazley Source:the TheBrown Insurance quarter Insider & Brown for brokers wins BeazleyNovae lags behind +25.3% AJ BrownGallagher & Brown+7.5% wins HiscoxNovae+1.8% +25.3% thethe quarter quarter for brokersfor brokers peersNovae-4.5% in LondonLancashire +25.3% the quarter for brokers Munich Re +2.5% Hiscoxpeers+1.8% in London Brownthe & Brown MMCquarter for +7.5%brokers+11.9% -0.9%-10HiscoxLondon-5 0+1.8% carriers5 10 index15 20 25 30 Brown & Brown wins Hiscox +1.8% Brown & WTWBrown +6.0% +11.9% Scor +2.2% Novae-0.9% LondonQ3 share carriers price change index (%)+25.3% Brown & BrownAon +9.9%+11.9% -1.8% -0.9%BeazleyLondon carriers index Brown & Brown +11.9% Source: The Insurance Insider the quarterJLT for+1.9% brokers -0.9% London carriers index AJ GallagherAonAon +7.5%+9.9%+9.9% Global Re index +1.0% Hiscox-1.8% +1.8%Beazley -4.5% -1.8%LancashireBeazley Aon0 2 4 6 8 10 12+9.9%14 -1.8% Beazley Brown AJ&AJ Brown Gallagher Gallagher +7.5%+7.5%+11.9% MMC Q3 share price change+7.5% (%) -0.1% Swiss Re -4.5%-0.9%-4.5% LondonLancashireLancashire carriers index AJ Gallagher +7.5% -10 -5 0 5 10 15 20 25 30 Aon +9.9% -4.5% Lancashire Source: The WTWInsuranceMMCMMC Insider +6.0%+7.5%+7.5% -3.0% Hannover Re -10-10-1.8%-5Q3-5 shareBeazley0Everest0 price5 5 change1010 Re1515 (%) falls2020 25 3030 MMC +7.5% AJ Gallagher +7.5% -10 -5 0Q3 share5 price10 change15 20(%) 25 30 WTWWTW +6.0%+6.0% Source:-4.5% The InsuranceQ3Lancashire Insider shareto theprice changebottom (%) JLT +1.9% -10.3% Everest Re WTW +7.5%+6.0% Source:Source: The TheInsuranceQ3 Insurance share Insider Insider price change (%) MMC JLTJLT +1.9%+1.9% -10 -5 0 5 10 15 20 25 30 0 2 4 6 8 10 12 14 -12 -10 -8 -6 -4 -2 0 2 4 Source: The Insurance Insider Munich Re +2.5% JLT0 2 +1.9%4 6 8 10 12 14 Q3 share price change (%) WTW 0 Q32 share+6.0%4 price6 change8 10 (%)12 14 Q3 share price change (%) Q3 share price change (%) Source: The Insurance Insider Scor +2.2% Source: The JLTInsurance Insider0+1.9%2Q3 4share6 price8 change10 12 (%)14 Source: The Insurance Insider Everest Re falls Source: The Insurance Insider Everest Re falls Source: The Insurance InsiderQ3 share price change (%) EverestGlobal Re Re falls index +1.0% 0 2 4 6 8 10 12 14 to the bottom Source: The InsuranceQ3 Insider share price change (%) Everestto the Rebottom falls-0.1% Swiss Re Everestto the Re bottom falls Source: The Insurance Insider to theMunich bottom-3.0% Re Hannover+2.5% Re DAY 1: SUNDAY Munich Re +2.5% to the bottomMunich Re +2.5% 19 -10.3% MunichScorScor Re Everest+2.2%+2.2%+2.5% Re -12 -10 -8 Munich-6 -4 ReScor-2 0 +2.5%2+2.2%4 GlobalGlobal Re index Re Scorindex +1.0%+1.0%+2.2% Q3 share price change (%) Global ReScor index-0.1% +2.2%+1.0% Source: The InsuranceGlobal Insider Re-0.1% indexSwissSwiss+1.0% Re Re -0.1% Global -3.0%Re index +1.0%SwissHannover Re Re -3.0% -0.1%HannoverSwiss Re Re -10.3% -3.0%-0.1% SwissHannoverEverest Re Re Re -10.3% -3.0% EverestHannover Re Re -12 -10 -8 -3.0%-6 -4 -2 Hannover0 2 Re 4 -12-10.3%-10 -8 -6 -4 -2 0 Everest2 4 Re -10.3% Q3 share price change Everest(%) Re -10.3%-12 -10 Q3-8 share-6 price-4 change-2 Everest(%)0 Re2 4 -12Source:-10 The Insurance-8 -6 Insider -4 -2 0 2 4 Source:-12 The-10 Insurance-8 Q3 Insider-6 share-4 price-2 change0 (%)2 4 Q3 share price change (%) Source: The InsuranceQ3 share Insider price change (%) Source: The Insurance Insider Source: The Insurance Insider WE GO FURTHER FOR OUR CLIENTS

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De profundis Emmanuel Clarke, who is currently steering PartnerRe under Agnelli family ownership, muses on the extent of market correction, the problems of Brexit and the one area in which InsurTech could be revolutionary

t’s been a busy period for PartnerRe “It has been a recurring topic in market pronounced correction in the US and a Isince its takeover by Agnelli family- meetings with clients prior to Baden and we trajectory back to technically adequate controlled investment company Exor in expect this will continue,” he says. “There are levels in other parts of the world.” March 2016. two questions here: What have we learned? Yet we should not expect the emergence Since then there have been a number of What impact will the US windstorm season of a broad-based hard market, if Clarke’s disposals, including the sale of a book of have on market conditions? take is anything to go by: US excess and surplus lines and property “The cat retrocession market will harden facultative business to Everest Re in March, International diversified materially, and the storms will also have an while the summer saw an agreement to sell “ impact on reinsurance rates. But as to the PartnerRe Insurance Company of New York capital will have been hit extent of hardening of reinsurance rates, to Employers Group. hard this year and we expect that will vary depending on whether the It’s clear that Emmanuel Clarke has been the global cat market to account is loss-affected, as well as a degree involved in a game of astute portfolio of variation on loss-free contracts. Here at management since becoming CEO last react PartnerRe we have a differentiated approach year. Yet talking to him in the run-up to this ” to clients – every client is different.” year’s meeting, it’s clear that the immediate “Firstly, I’d say that the value of reinsurance Despite his insistence on a differentiated eyes are on the prize of what he refers to as a product has been well demonstrated, market, Clarke is nonetheless keen to stress as a “pronounced correction” in market but there are now clear opportunities for a degree of interconnectedness – at least for conditions after the horrendous onslaught the market. Firstly, there is an opportunity cat-related business: of natural catastrophes that dominated the for clients to assess the value of reinsurance “Our clients know that they buy third quarter, particularly the US windstorm versus alternative capital products. There is internationally diversified cat capacity season. also an opportunity for model validation. because it would be much more expensive We’ve had some quite large events which if it wasn’t, so I would really caution have no doubt triggered some internal people here who think in terms of discrete dialogues around model failure.” European, Japanese or Australian cat Just how far this reassessment of markets. reinsurance as a product will actually “The only way the cat market exists is that translate into meaningful rate increases, it is a global market, with clients able to and a lasting hard market beyond buy diversified cat capacity. International this, is the key underlying question. diversified capital will have been hit hard After all, even in the wake of Katrina, this year and we expect the global cat Rita and Wilma in 2005 the hard market to react.” market remained frustratingly localised, and didn’t meaningfully Reinsurance tail translate over to the European A perennial question is the extent to which windstorm renewals. any changes to market conditions will be In some respects Clarke is fairly determined by the major European cedants, bullish here, noting that “clients or by the reinsurers themselves. want nat cat cover, and the clear Here, perhaps unsurprisingly, Clarke expectation in all conversations suggests that the reinsurance tail is indeed we’ve had is that there is a resetting of wagging the dog. “The big four European conditions… 2017 has brought an end to reinsurers have a meaningful market share the number of no-cat years, and tail risk is in Europe as a group and are relatively hard now a closer reality”. to replace for clients,” he observes, “so all I Yet his overall take on changes to market would say here is that their approach to the conditions is more measured. market will drive the market”. “If we look at industry losses, no one is Of course, there’s more to life than quite sure what the figure will be at the obtaining a decent renewal after years of moment, but if we take $100bn as a suffering. And for the reinsurance market, a proximate then this is a big number major topic at the Monte Carlo Rendez-Vous and will wipe out quite a bit of this year, and one spoken about at length by profit or capital, meaning the cost the major reinsurers, concerned the issues of capital from all forms of capital created by the gap between economic and will go up,” he comments. Continued on page 23 “So, expectations will be for a

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Continued from page 21 the UK leaves the European single market low as $10 for a simple life policy offering post-Brexit. a $3,000 indemnity – would be paid by insured losses. Questions have indeed been raised as to money transfer websites in exchange for Indeed, while much of the focus has whether it is possible to write European customer loyalty. been on emerging markets, there remains business successfully by fronting and Much is made of projects such as these significant uninsured exposure in Europe fac-ing everything back to London/ in the wider market, with talk of InsurTech too. Is this, in Clarke’s opinion, an area that Bermuda. For Clarke, one thing is initiatives eventually revolutionising the is being actively looked at – or is it all hot air clear – Brexit is not exactly a welcome market. Is Clarke as convinced? and no progress? development: “When I think about InsurTech I think “I guess the protection gap has been the “Brexit hasn’t been defined yet politically about three main areas: distribution and flavour of the last few meetings, when we speaking, but there will be significant client experience; data analytics; and the haven’t had quite as much to talk about as uncertainty for international business,” he efficiency of operations. we do this year!” he jokes. “But I do think comments. “There is the risk of an increase “So, in terms of distribution it has the there’s been some progress here – just look in costs because people will have to adjust potential to be more revolutionary. For data at Flood Re in the UK, which contributed to their set-ups to adapt to a different and analytics, it’s about continually improving bridging the protection gap.” more complex regulatory landscape – and managing our risk selection better. In Clarke also says we should examine what making the whole market less efficient.” terms of the efficiency of operations, it’s happened in the US with Harvey, which he about lowering the costs of production believes “has been a clear demonstration and it’s definitely more evolutionary, that US policyholders are not as well There are still way too as technology has helped bring more covered for flood as they should be”. many“ cents in the dollar that efficiency to our operations.” “It’s an invitation for private market are just frictional costs and Brokers beware! participants and governments to sit down get in the way of making together and do something,” he says. “It’s really unbelievable that only 15 percent of our products compelling Houston residents were covered for flood.” enough Emmanuel Clarke biography Clarke is keen to offer practical advice ” here, noting there are two ways to make For PartnerRe, which since its takeover of Education progress on bridging the protection gap. Paris Re has had a significant presence in v Master’s degree in Business Firstly, he notes, you need strong political Europe, and in particular Zurich, it’s not all Administration from the University will from governments to either back out about lamenting future inefficiencies caused of Paris, IX – Dauphine, specialising from providing insurance, or to make by political turbulence. Indeed, Clarke in Finance and Controlling specific insurance products a mandatory suggests, the development of Zurich as a v MBA in International Business from purchase. Secondly, he says, “there needs hub has in many ways been a positive force: Baruch College of CUNY to be a clear will from the private market to “With more reinsurers in Zurich it does make our products more compelling, either create a marketplace, so for brokers and Career through distribution, customer experience clients, being a concentrated market makes v 1997: Joined PartnerRe in 1997 with or competitive pricing”. it easier and more efficient. the acquisition of SAFR “What I would say is that there’s an “But on the negative side it has pushed up v 2001: Appointed head of credit and opportunity here for InsurTech to make compensation inflation as the availability surety, global, later becomes head distribution easier and client experience of specialised talent is limited, so there is a of property and casualty, global and better. And there are still way too many little bit of a musical chairs game. Overall, it then head of specialty lines, global. cents in the dollar that are just frictional also keeps increasing the number of players v 2010: CEO, PartnerRe Global, costs and get in the way of making our interested in European business, despite the responsible for global non-life products compelling enough. How many fact that the margins are at an all-time low.” operations outside North America, cents in the dollar are just going on cost InsurTech is the buzzword of the moment as well as the company’s life and ratio?” – indeed Clarke has already mentioned it health operations worldwide. Is this mainly an issue for Lloyd’s and himself during our earlier protection gap v 2015 President, PartnerRe the London market though? “Definitely discussion and our line of questioning v 2016 Also becomes CEO, PartnerRe Lloyd’s has an issue and it’s urgent for the naturally turns back in this direction. market to tackle it, but global insurance PartnerRe and Axa recently announced a and reinsurance players also know this is link-up with AI-driven InsurTech and data Other important and there is pressure to reduce firm RemitRadar to tackle the protection v Clarke currently serves on the costs.” gap for uninsured migrant workers. Insurance Europe Reinsurance RemitRadar acts as price comparison Advisory Board, is on the board Brexit and beyond site for online money transfer services. Its of directors of the Association of With the UK’s negotiations with the EU insurance proposition is to sell life and Bermuda Insurers and Reinsurers still seemingly stuck over the issues of workers’ compensation policies to these and is a member of the Geneva the divorce bill and EU citizens’ rights, the workers, with the company acting as a Association London market has not lost any time in digital distribution platform for global ensuring it will not suffer if, as seems likely, insurers. The premiums – which can be as

DAY 2: MONDAY 23 FOCUSED PROTECTION. ALWAYS.

46300IGI Brochure cover resize AW.indd 1 10/05/2017 13:06 bi BIG question: buying habits

As the European reinsurance market descends once more on Baden-Baden, leading market executives debate quota share (QS) versus excess-of-loss (XoL), and whether the Q3 cat losses could prompt an increase in the amount of cover being bought

With rates competitive by historical reached the bottom of the cycle and prices However, for most, securing the existing standards, do you expect to see additional may harden globally. coverages at acceptable terms for all parties cover purchased at 1 January? Nevertheless, some insurers may come is probably the main focus that we are seeing to the conclusion that they need or want at the moment. Jorg Bruniecki, head of global clients and to further protect their net earnings with broker management, PartnerRe additional reinsurance coverage for both There have been limited signs of The perceived value of reinsurance has frequency and severity protection. We are increased use of QS cover – sometimes definitely increased. Volatility in results is not already in discussions with some of our at the expense of XoL – as primary rates viewed favourably by capital markets, more longstanding clients about adjusting their worse. Do you expect that trend to pick up so at times of thin margins overall. Equally, current reinsurance structure. pace at 1.1? rating agencies are putting a focus on earnings stability. David Flandro, global head of analytics, Tsimaratos: Cedants will be looking at how to best JLT Re Yes, we do see QS coverage being used protect their results. Reinsurers that can We have been watching this trend closely tactically by players that have been take a five- to 10-year view are best placed for about 15 years now. The insurance historically using this as part of their to help their clients take the volatility out of sector’s cession rate (ceded divided by gross reinsurance strategy. QS use is further their balance sheets, provided they get paid premiums) reached a trough in 2014 and has supported by a relatively active MGA market for it adequately. been slowly rising ever since. We think this in the UK, but also other places. That trend trend will continue at 1 January. is disconnected to the current XoL market Charles Whitmore, managing director, conditions and is likely to continue at 1 head of placement solutions group, Guy Torsten Jeworrek, reinsurance CEO, January. Lastly, we also continue to see Carpenter Munich Re quota shares being deployed as capital relief We expect to see cedants wanting to It is normal procedure that insurance structures, alongside sub debt and legacy/ purchase additional reinsurance for a variety companies review their reinsurance reserve protections. of reasons, not just opportunistically to programme after the sort of events we take advantage of the competitive trading saw recently. There might be an increase in Henchoz: conditions. Another key driver of increased demand for reinsurance. But in the end it is Currently, we expect that the primary purchasing is regulatory (Solvency II in an individual decision if they want to buy at markets will also harden so we don’t expect Europe), and we also think the frequency and the prices available. to see material additional demand for severity of recent hurricane events might conventional pro-rata business. prompt buyers to lower retentions and Alkis Tsimaratos, managing director, head purchase additional vertical cover. of EMEA W/S, Willis Re Whitmore: Potentially yes, but not due to QS reinsurance is an effective hedge against Jean-Jacques Henchoz, CEO of reinsurance competitiveness of rates. The current Q3 inadequate original rates, but only as long EMEA, Swiss Re US loss environment and historical loss as the reinsurer on the other side of the deal The expected catastrophe losses in 2017 environment in Europe is advocating for is receiving terms that make sense to them. and their severe impacts on the industry’s more aggregate covers or second retention Continued on page 27 earnings and capital basis suggest that we’ve sublayer ones.

DAY 1: MONDAY 25 b BIG question: buying habits

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6 December 2017 08.45 – 18.30 Convene, 237 Park Avenue, New York, NY 10017

Speakers: Key topics include: Inaki Berenguer, CEO and Co-Founder, CoverWallet c Forging new partnerships: the relationship between Max Chee, Head of Technology Growth, Aquiline Capital Partners InsurTech and the traditional re/insurance model Michael Halsband, Partner, Drinker Biddle & Reath LLP c The future of digital distribution Andy Lerner, Managing Partner, IA Capital Group c An investor’s perspective Aviad Pinkovezky, Head of Product, Hippo Insurance c AI & Machine Learning Barney Schauble, Managing Partner, Nephila c Using Big Data Ben Sloop, President, AmWINS Access c RegTech: Easing the regulatory burden c The other 85%: innovating beyond distribution costs Further speakers will be announced shortly

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ITNY-2017 ad.indd 1 19/10/2017 11:40 b BIG question: buying habits

Continued from page 25 Tsimaratos: CEO, you have to achieve capital market LIMITED Yes, alongside the cat XoL, aggregate is expectations so if your investors have an complimentary But overall yes, we do anticipate an increase core and the core is in the agg – both appetite for volatility and understand the places available for in the utilisation of QS reinsurance as original property cat aggs and multi-line aggs are drivers for it, you will not have to buy below verified investors rates worsen. now cornerstone covers in many clients’ the group risk appetite. Supported by * strategies. What you want is to make sure that your Jeworrek: Interestingly most cedants that have risk appetite as a group is right for the Regarding our book, we saw increased moved into the aggregate protection space opportunities that present themselves. appetite for quota shares in US casualty at in the last 10 years have those strategies in Cycles everywhere are becoming shorter and our last 1 January renewal. Nevertheless, we place, evolving them year-on-year according less pronounced. Missing hardening markets regard this as segment-specific and would to their group risk and retention appetites. because you are hesitant will make you less not talk of an overall trend. This remains a fundamental trend and more likely to outperform the market. such covers are being explored. The current Is aggregate reinsurance a core market conditions across all lines offer a Flandro: reinsurance purchase for most cedants good timing opportunity to rethink parts of I wouldn’t say it’s come to a halt or going 6 December 2017 now after years of increased buying? And the programmes along those lines. into reverse; it has simply been undergoing a 08.45 – 18.30 will we again see more purchased at 1.1? re-assessment since about 2015. Sometimes Has the trend towards centralisation of it can be more economical and efficient Convene, 237 Park Avenue, New York, NY 10017 Bruniecki: reinsurance spending come to a halt? Is it to undertake standalone purchases for As long as buying motivations remain the going into reverse? certain classes of cover and lines of business, same, there should be no fundamental especially regionally, and especially when change. The recent events, however, Tsimaratos: rates are as low as they have been. will cause many buyers to review their We don’t think so. More than coming to a This is not to say consolidation does not strategies. Conversations with clients have halt or reversing, the centralisation strategies have its advantages such as economies of shown that they value covers that protect are maturing. As companies are getting scale, it’s just that economies of scope can be them from exposure to multiple events, a better grasp on their risk appetites and broadened with regional purchases. and consideration of aggregate or even requirements, the use of internal vehicles is additional reinstatements will continue to be being deployed with more business acumen Whitmore: of interest. – alongside the financial rationale that they The centralisation of reinsurance via intra- absolutely provide. group reinsurance vehicles has surged in Flandro: Hence, groups are becoming more tactical recent years, and most of this activity has I would say aggregate cover is a core tool at using intra-group vs extra-group, with come from the larger insurance groups for most buyers, who can use it to design better-informed decisions and trade-offs which have wished to capture the cross-class optimal structures. It remains to be seen between open market use, local or global, diversification benefits available to them whether the increase in aggregate covers will and own retention. under the current capital regimes. Speakers: Key topics include: continue at 1.1, although there are very good These vehicles have been designed to Inaki Berenguer, CEO and Co-Founder, CoverWallet c Forging new partnerships: the relationship between reasons for cedants to consider it. Henchoz: withstand the vagaries of the reinsurance Max Chee, Head of Technology Growth, Aquiline Capital Partners InsurTech and the traditional re/insurance model These issues are a feature of good capital cycle, and we therefore anticipate that they Michael Halsband, Partner, Drinker Biddle & Reath LLP c The future of digital distribution Whitmore: management by our clients. It’s a logical will remain in place in the coming years. Aggregate reinsurance has become more market progression that will continue to Notwithstanding this, many large insurers Andy Lerner, Managing Partner, IA Capital Group c An investor’s perspective popular in recent years as a means of some extent. However, an interesting feature are also evaluating their needs around the c AI & Machine Learning Aviad Pinkovezky, Head of Product, Hippo Insurance protecting against earnings volatility, and of the last 12-24 months are the signs of protection of volatility and we have noticed Barney Schauble, Managing Partner, Nephila c Using Big Data the continuing earnings squeeze has meant market fragmentation, where drivers such an increase in the reinsurance purchased. Ben Sloop, President, AmWINS Access c RegTech: Easing the regulatory burden that aggregate has formed an integral part of as capital standards and the regulatory c The other 85%: innovating beyond distribution costs Further speakers will be announced shortly cedants’ protection landscape. environment are leading companies to Jeworrek: split and/or become more local. It will be After a number of years, the level of Jeworrek: interesting to see how this emerging trend centralisation and intra-group reinsurance So far, we have not seen any development develops. that conglomerates use has reached a in terms of demand changes for aggregate high and stable level. Nevertheless, we reinsurance covers. Munich Re offers all Bruniecki: also see that even international companies Sponsored by: kinds of different solutions. In each case, we It comes down to what you think is the additionally make use of local/regional individually discuss with each client which most effective way to run your business. buydowns and tactical treaties to bridge solution is best suited for a specific situation. Reinsurance can help in manifold ways – critical situations or for reasons of capacity not just as a capital relief instrument. As a and balance sheet strength.

Jörg Bruniecki David Flandro Jean-Jacques Torsten Alkis Tsimaratos Charles Whitmore Head of global Global head of Henchoz Jeworrek Managing Managing director, client and broker analytics, JLT Re CEO reinsurance Reinsurance director, head head of placement management, EMEA, Swiss Re CEO, Munich of EMEA W/S, solutions group, P HOW TO BOOK YOUR PLACE… P TO BOOK YOUR PLACE OR PartnerRe Re Willis Re Guy Carpenter Subscriber rate $445 (for named subscribers only) FOR FURTHER INFORMATION Earlybird rate $545 (until 31 October) $645 thereafter please contact Beatrice Boico on Exclusive discount available to start-ups [email protected] / +44 (0)20 7397 0619 DAY 2: MONDAY 27 *Places will be given out on a first come, first served basis

ITNY-2017 ad.indd 1 19/10/2017 11:40 LGT advert 2017.indd 1 29/08/2017 15:46 t TRAding risk

HIM cat bond slide matches Katrina downturn at bond market prices had been Cwritten down by 5.3 percent by Cat bonds bounce back from HIM storms mid-October after hurricanes Harvey, Cat bonds bounce back from HIM storms Irma and Maria, as multiple insurance- 100 linked securities (ILS) transactions were 95 expected to respond to the disasters. However, to date the largest known 90 ILS loss this year came from the recent 85 Mexican earthquakes. And rather than

the deadly Mexico City temblor that has Index value 80 caused extensive (re)insurance losses, it was 75 the earlier, larger, but offshore quake that produced a $150mn ILS market hit. 70 This came from a World Bank-sponsored parametric cat bond benefiting Mexican disaster scheme Fonden. It is the second ILS 14/07/2017 21/07/201728/07/201704/08/201711/08/201718/08/201725/08/2017 01/09/2017 08/09/2017 15/09/2017 22/09/2017 29/09/2017 06/10/201713/10/2017 payout for the fund in as many years after Source: Swiss Re Capital Markets, Trading Risk it received a $50mn partial payout under its prior ILS transaction as a result of 2015’s international reinsurers, although some cents and others at up to 75 cents – and to a Hurricane Patricia. aggregate layers of Residential Re deals for lesser extent for some of the Kilimanjaro Re Writedowns on hurricane-exposed bonds insurer USAA have been marked down. deals for Everest Re. have been more extensive, however. Two bonds that have been written down In the same conservative industry The Swiss Re global cat bond price return on ILS broker-dealer pricing sheets to reflect loss scenarios described above, Trading index dropped 5.3 percent over the six a possible full loss are the $20mn Class C Risk analysis suggests partial payouts of weeks from 1 September, when it recorded a layer of Florida insurer Safepoint’s Manatee potentially $40mn from the recently issued value of 94.77, to reach 89.75 on 13 October. Re 2016-1 cat bond, and the $150mn Atlas high-risk class A layers of the Galilei Re 2016- But the market has regained some value IX Capital 2015-1 class A cat bond issued by 1 and 2017-1 deals, and potential claims after plunging by 15.4 percent while Irma Scor. under two earlier Galileo Re cat bonds was heading towards Miami, in what was The latter is one of a handful of ILS deals to issued in 2015 and 2016 as well. the largest drop since the ILS index began include exposure to Puerto Rico alongside in 2002. US coverage. Writedowns reflect The 2017 writedowns correspond to the As reported in the latest edition of Trading changed environment size of the declines posted in the year of Risk, conservative industry losses of $20bn Falling cat bond prices in the wake of Hurricane Katrina, although in that case apiece for Texas and Florida, combined with hurricanes Harvey, Irma and Maria have price falls were more gradual as the index a $22.5bn loss for Puerto Rico, would be already pushed ILS yields up by 15-25 lost roughly 6 percent of its pre-Katrina enough to trigger the Atlas notes. percent, according to the Lane Financial value over the second half of the year. Using these industry loss assumptions, the rate-on-line index. At a deal-specific level, Aon Securities data claimable losses would reach $697mn above The mark-to-market losses across all showed that about $1.67bn of cat bonds a $650mn attachment point, suggesting a bonds, including those not impaired, wiped – or around 6.5 percent of the $25.8bn $47mn loss for investors in the bond. around 10 percent or $2.5bn off the value market, as of 30 June – had been marked But while one pricing sheet put the layer of the outstanding $25bn market, based on down by 25 percent or more. as low as 5 cents as of 13 October, bids pricing bids at the end of September. Of this total, Florida-only bonds accounted ranged as high as 30 cents, suggesting there Lane said that the full extent of these for $159.8mn while aggregate bonds is still ambiguity around the size of the writedowns may never be realised, as the amounted to $1.52bn, Aon Securities CEO anticipated claim. non-impaired bonds would likely mature at Paul Schultz said during the recent Trading Other deals that were marked down par value. Risk New York Rendez-Vous. below 50 cents on average as of 13 October “The current downshift in the market included a small class C tranche of the expresses the view that the next issue of Payouts to watch Casablanca Re cat bond for Avatar; a multi- similar bonds will be issued at higher yield,” The wind-exposed cat bonds on watch as year aggregate Blue Halo deal benefiting the firm explained. a result of the HIM storms are made up of Allianz Risk Transfer; a private Citrus Re layer In 2005, Lane’s rate-on-line index more both small, high-risk layers sponsored by issued this year for Heritage; and one of the than doubled from a value of 75 to 175. Floridian carriers and annual aggregate cat Integrity Re layers for American Strategic. In the third quarter the index moved up by bonds. Pricing indications also vary hugely on around 14 percent, from 91.7 at the end of For the most part, the latter provide some of the Galileo/Galilei bonds for XL – June to a “quite speculative” 104.5 at the end industry loss-based retrocession cover for with some firms marking one layer at 35 of September, Lane said.

DAY 2: MONDAY 29 events

WEEK2017LY NEWSLETTER EVENTS

The London Market InsiderTech New York EY Global (Re)Insurance Conference 2017 6 December 2017 Outlook 2 November 2017 08:45-18:30 8 December 2017 08:15-19:00 Convene, 237 Park Avenue, 08:00-12:00 etc. Venues, Liverpool Street, 155 New York, NY 10017 Hamilton Princess, Bermuda Bishopsgate, London, EC2M 3YD www.insiderinsurtech.com RSVP: [email protected] www.insiderlondonmarketconference.com Speakers include: Speakers include: Speakers include: Inaki Berenguer, CEO and Kathleen Fairies, Head of Bermuda, Bruce Carnegie-Brown, Co-Founder, CoverWallet Tokio Millenium Re Chairman, Lloyd’s Max Chee, Head of Technology Kathleen Reardon, CEO, Hamilton Re Greg Case, President and CEO, Aon Growth, Aquiline Capital Partners Jay Rejendra, Chief Analytics Officer, Stephen Catlin, XL Catlin Michael Halsband, Partner, Drinker Arch Capital Group Steve Hearn, Group CEO, Ed. Biddle & Reath LLP The Hon. Jamahl S. Simmons, JP, MP Andy Lerner, Managing Partner, (Minister of Economic Development #InsiderLMC IA Capital Group and Tourism)

#InsiderInsurTech

For further information For further information on attending any of the above events, please contact on speaking, exhibiting and sponsorship Jennifer Lord on +44 (0)20 7397 0619 or opportunities, please contact Spencer Halladey on [email protected] +44 (0)20 7397 0613 or [email protected]

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30 DAY 2: MONDAY opinion

Just say ‘know’ to InsurTech

nsurTech’s impact on the insurance and the larger insurance ecosystem? Some dollars and has risen 44 percent per year Iindustry is surging, reminding us of the data sources are publicly available and based on the number of deals between influence that technological change and easily accessible, while others are clearly 2011 and 20161. growth bring to the modern consumer proprietary – such as driver behaviour Given the exponential rise in interest in and business landscapes and individual captured through a vendor’s telematics this space, participating companies would industries — the development of Fintech application. Capturing information in real benefit by focusing on areas with the within financial services being an time through sensors or mobile devices is most potential for success and value-add example. the newest process for the collection of data within the insurance ecosystem. Providers To gain the advantages promised as for analytics. and start-ups have proliferated, each with InsurTech offerings proliferate, companies While start-ups do not have a long history a unique capability for leveraging DAT. need to know the opportunities afforded; of data, their nimbleness and creativity Several that received the most funding and know their own strengths and capabilities allow them to collect rich data quickly. attention leveraged all three pillars to create for engagement; and know their clients’ Some of these firms are collecting new a compelling business case for investment. needs and expectations. data through their own applications. With The space is naturally dynamic and The right InsurTech investment decisions influenced by many factors outside its can bring potential value-add opportunities The challenge is that control. For example, there is a natural to many areas including the Internet “ interest in cyber-related risks and how to of Things (IoT), infrastructure, artificial the broader trends are identify, quantify and control them. Several intelligence, robotics, machine learning and increasingly dynamic– the new start-ups profess strong capabilities data ingestion. targets for ‘best in class’ in distilling this complex risk area into Similarly, fundamental aspects of digestible pieces for insurers and their insurance operations – claims, underwriting, and even for customers’ insureds. policy administration, customer experience, minimum expectations are With cyber perils and exposure still an operations, call centres and marketing – being redefined constantly emerging risk, it is difficult to determine have all been influenced by the exponential ” which vendors will be the winners rise of technology. InsurTech has significant and which the losers. Deciding which potential to be deployed as part of a sophisticated analytics, they can also mine capabilities will meaningfully impact business model where companies have the data more effectively to find nuggets of business and which vendors can deliver deeper “touchpoints” with consumers. insight that drive solutions. The mining of them requires careful consideration and The InsurTech marketplace is expanding this data is just one of the ways InsurTech will be a necessity for keeping pace with or through new start-ups and existing firms will gain a foothold in the larger staying ahead of the competition. companies that are gaining a deeper insurance community. For companies seeking profitable understanding of both the incremental growth, expanding the cyber scenario into and the transformational potential of What should carriers be doing? potentially all other risk areas and “saying InsurTech. Its reach is increasingly broad and One success factor for companies is the know” to InsurTech is critical to avoiding is the evolutionary next step for insurance ability to identify partnerships and make missteps and making the right investment through the combination of data, analytics investments that leverage a firm’s key decisions. and technology (DAT) in new and innovative capabilities and recognise shortcomings ways. that could threaten strategies and growth. 1CB Insights “Insurance Tech Start-ups Raise $1.7bn across 173 Deals in DAT supports services and capabilities To do that, it is critical for companies to 2016,” 5 January 2017 that allow the industry to more efficiently understand their own DAT footprint and and effectively drive down costs and capabilities and how company-specific DAT increase client value. The most valuable capabilities relate to broader InsurTech InsurTech capabilities incorporate all three trends. This understanding highlights components of DAT in order to: capability gaps and allows strategic direction to be set for a company to move v More effectively use available data; toward desired products and services. v Create new insights through advanced The challenge is that the broader trends analytics; and are increasingly dynamic– the targets for v Serve output to users through mobile- “best in class” and even for customers’ enabled technology. minimum expectations are being redefined constantly. Companies must find ways to Is data the hard part? monitor constantly and accelerate their In many ways, the proliferation of data responses to market shifts. across the modern, connected landscape Claude Yoder Global Chief Innovation and Product has driven more innovation than either Compelling trends for growth Development Officer, analytics or technology. Is “having” the data InsurTech funding has increased by 65 Guy Carpenter & Company a key consideration for InsurTech markets percent per year in terms of investment

DAY 2: MONDAY 31 BRINGING OPPORTUNITY TO RISK

ADAPTATION The rapidly expanding development of technologies and operating models across the insurtech landscape presents both challenges and opportunities to our clients at an increasingly accelerated rate. Guy Carpenter is delivering innovative solutions around new digital capabilities that allow our clients to adapt, evolve and grow in new ways.