How would you describe your role as CUO at RenaissanceRe?
I joined RenRe in 1999, when the company booked about $350m of gross premium. Almost all was property cat and written in the Bermuda office. My role has grown as the company has grown. In 2020, gross premiums were almost $6bn, split approximately 50% property and 50% casualty and specialty across multiple balance sheets and in several locations.
At a basic level we aim to match risk to capital as efficiently as possible. I work with a phenomenal team of people engaged in the day-to-day underwriting, portfolio construction and optimisation and capital planning.
My main priority is establishing near-term and long-term underwriting strategy, developing underwriting tactics, evaluating capital utilisation. I make sure that the underwriting engine runs well!
Why has the CUO’s corporate profile grown in recent years?
There’s been more focus on underwriting over the years for various reasons. Natural catastrophe loss activity and climate change, increasing social inflation and the growing role of alternative capital are impacting the liability side of the balance sheet, which is increasing scrutiny of underwriting.
From a RenRe perspective, we have grown materially over the last few years, organically and through M&A, and that’s led to more underwriters writing more business in different locations to better serve our clients. So, we have strived to develop that network in a way that allows us to operate efficiently across all portfolios and segments.
There’s more emphasis on generating profits from underwriting — actual and expected.
The level of engagement with regulators and rating agencies has increased and that naturally feeds into oversight of the underwriting risk we accept and how we evaluate it.
Ultimately, our three drivers of profit are underwriting, investment income and fee income. Fee income has been growing, while the low interest rate environment has made investment income challenging, meaning there’s more emphasis on generating profits from underwriting — actual and expected.
Unusual for a CUO, you have a master’s degree in mental philosophy (from the University of Edinburgh). What skills does a modern day CUO require?
My interest in philosophy absolutely helps me understand the interconnectedness of things; it helps me better understand both sides of an argument and to apply both logical and critical thinking to problems.
Generally, while data analytics expertise and being ‘tech savvy’ is usually associated with the CUO role, the overall skillset of a CUO will vary according to the nature and size of the company, the markets and classes of business.
My interest in philosophy absolutely helps me understand the interconnectedness of things.
At RenRe I’m concerned with balancing change and stability. I need to be aware of which portfolios could come under stress from, say competition or performance, and at the same time look for areas of opportunity and expansion. I need to be sure we have the capabilities, plus the capital, to deploy to existing and new businesses.
How does an effective CUO serve clients through underwriting cycles — and not just their own firm?
We are very much client focussed and in partnership with clients in different ways. Our mission is matching risk with capital, and we work with clients to achieve that. We must understand our clients’ business and strategy to figure out how reinsurance best fits their needs. It could be about providing short term protection to a specific challenge; at other times the solution could be engaging in partnerships to bring new products or maybe additional capacity to a growing opportunity.
We constantly communicate with clients over our underwriting appetite and structures and balance sheets. It can lead to tough conversations when it might be a situation where we have no appetite for a certain class of business, or where we seek changes in pricing or terms and conditions. But we always explain the rationale behind our position from a collaborative point of view. I believe RenRe is recognised by our partners for our problem-solving, partnership-based approach. We certainly think it’s the foundation of our relationships.
You’re head of diversity, equity and inclusion (DEI) at RenRe: is this something you feel strongly about?
As at many companies, DEI was initially under HR’s remit at RenRe. But we believe that there is a greater business imperative for a strong focus on DEI and also an opportunity. I hope that CUO involvement in this space will grow across the industry.
I have many reasons for being involved, not least of which is being the father of two daughters. But I think it is important ethically, culturally and for who we are as a company and industry. It’s the right thing to do.
It’s been shown that companies that have good diversity and inclusion outperform from a financial perspective.
We’ve been on this journey for a few years now. We have distributed a lot of knowledge through the organisation on topics such as unconscious bias, mental health and allyship. Our staff is very engaged and we’ve also made a lot of progress on structuring our DEI strategy and apportioning responsibility and accountability. We’re pleased and proud of what we’ve done so far and are looking forward to continuing to make advancements and drive change.
As a CUO, how does climate change risk feature in your decision making?
Climate change represents a huge part of our risk understanding and evaluation activity, with research carried out by RenRe’s Risk Sciences team, which monitors and quantifies global geophysical risks across business segments.
In the context of ESG, understanding climate change is crucial in promoting climate resilience and closing the protection gap. But it also helps us develop new products over time or in the near term, adjusting our pricing on existing products.
When people talk about climate change the emphasis is usually on impacts to property exposures, but we consider the impacts and opportunities across all our portfolios. So, my perspective on climate change is narrow at times and broad at others.
What are the biggest challenges facing the industry?
Climate change is front and centre of the challenges facing the industry.
Inflation is not a new challenge in itself, but the addition of complex social inflation presents our industry with a serious long-term issue.
Inflation is not a new challenge in itself, but the addition of complex social inflation presents our industry with a serious long-term issue.
Still on the risk assumption side, cyber risk represents an opportunity but also an area that calls for extreme caution.
On the bigger stage, the insurance industry needs to be clear on the underlying value of insurance and reinsurance to maintain relevance by understanding buyers’ changing needs. We need to improve the efficiency of distribution, from consumer to capital. There’s still a lot of work to be done.
Retaining, attracting and developing talent within the reinsurance industry is another imperative. The work we’re doing on ESG, on climate change, and on closing the protection gap is attractive to potential hires and current employees and we should continue to promote that.
Did the pandemic change anything in your sphere of activity that might not have happened otherwise?
Although the move to remote working and collaboration did come with some challenges, the pandemic accelerated some of the changes we were already making in terms of networking.
A serendipitous aspect at RenRe, from an inclusion perspective, was that we were able to involve more people in conversations and convey information about our underwriting appetite and projects, for example.
For the industry as a whole, the lack of real personal interaction has changed the client and broker dynamic in the last 18 months. An element of personal interaction is important, but global lockdowns raised questions about how much travel is actually necessary, efficient or appropriate.
Our team has certainly missed the in-person engagements with our partners that foster the trusted relationships which have become even more critical in a time of global uncertainty and upheaval. Travel to meet clients will return in the future but I think we have all learned a lot about improving efficiency and taking the opportunity to organize more fruitful, frequent and inclusive meetings in the meantime.
