The Reinsurance Market Today: Four Guiding Principles for Sustained Success

Everest was excited to participate in this year’s Rendez-Vous de Septembre. Like so many of our clients and peers, we have been eager to reconnect and share insights, challenges, and opportunities across the reinsurance industry. We engaged in lively discussions about the outlook for the industry and wanted to share some key takeaways everyone will be watching for in 2022:

A flight to quality, a hardening market and an increased focus on digitization have well-positioned Everest for 2022 and beyond. Our underwriters are finding new and innovative ways to better work with clients to solve for their exposure, while continuing to build on the fundamentals: the deep relationships, financial strength and stability needed to maintain these long-term partnerships.

Reinsurers must be built to absorb risk and potential volatility from our clients. Everest achieves this through a combination of financial strength, diligent underwriting, and effective modeling and actuarial expertise. Quality and stability are the differentiators we hear day in and day out. Clients value strong relationships with well-rated and experienced reinsurers like Everest who can deploy meaningful capacity and underwrite a diverse set of products to offer holistic solutions to their needs.

Whether a piece of business is based in the United States, London or Singapore, a company’s fundamentals remain the same. A strong reinsurance company maintains rigorous centralized business controls and disciplined underwriting guidelines to ensure a balanced global portfolio.

While it is important for operational foundations to be viewed through a global lens to manage risk across an organization, on-the-ground expertise allows for an increased understanding of local insights and deep knowledge in regional markets. Today’s technology offers the opportunity for us to communicate with the click of a button, but local expertise should not be sacrificed in favor of on-screen connections. Local offices and underwriters understand the nuances of a region’s language, culture and business in a way that cannot be replicated via a cross-continental video conference.

The Texas freeze, wildfires and European floods have brought the far-reaching effects of climate change to our front doors. Companies large and small are grappling with how to best protect their organizations from the effects of industrialized ransomware. For classes of business facing significant, high-profile and/or evolving risk factors, a thoughtful assumption of risk approach is key. A strong team of knowledgeable underwriters and robust analytics can allow a company to move in and move out of lines that may come with more complex or topical risks with confidence. Everest’s capacity is deployed where the risk and the rate are right, even in challenging classes of business.

To provide a real-world example of this thoughtful assumption of risk approach, we can take a look at Everest’s mortgage book. Everest is a market leader and has written a large book of mortgage for over a decade, but last year, among questions relating to both the pandemic and presidential transition in the United States, we took a moment to slow down and strategize how to best restructure mortgage deals to ensure a balanced, profitable book. We anticipate a healthy flow of new transactions in the mortgage industry this year, and with our refined strategy in place, we can work confidently at the forefront of those transactions.

There is a data and analytics arms race in the market. Those companies that learn how to best harness the power of data and analytics, without losing sight of in-person relationships, will be best-positioned to succeed long term. When looking at the complexities of climate change, for instance, vendor modeling is a starting point, but Everest supplements that with our own view of the risk using the most up-to-date analytics and data we collect internally. Investing thoughtfully and deliberately in technological advancements and putting the right talent and platforms in place to analyze data and help companies bring improved risk solutions to customers.

Keeping these key principles at the forefront can help reinsurers and their clients navigate the months and years ahead with confidence.