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2018 Reinsurance Market Briefing Rendez - Vous de Septembre , Monte Carlo Greg Carter Managing Director, Analytics - EMEA Anthony Diodato Managing Director, P/C and Reinsurance Robert DeRose Senior Director, Global Reinsurance Ratings Nick Charteris - Black Managing Director, Market Development - EMEA 9 September 2018

2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

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Page 1: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

2018 Reinsurance Market Briefing

Rendez-Vous de Septembre, Monte Carlo

Greg CarterManaging Director,Analytics - EMEA

Anthony DiodatoManaging Director,P/C and Reinsurance

Robert DeRoseSenior Director,Global Reinsurance Ratings

Nick Charteris-BlackManaging Director,Market Development - EMEA

9 September 2018

Page 2: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

A.M. Best Delegates

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 2

Page 3: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Preparing for Brexit……

2018 Reinsurance Market Briefing, Monte Carlo September 9, 20183

• A.M. Best currently registered with European Securities and Markets Authority (ESMA)

• Allows market access across the current EU 28 to provide rating services

• New registered EU subsidiary being established in Amsterdam to maintain EU 27 access

• Operational by 29 March 2019

Page 4: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

© AM Best Company (AMB) and/or its licensors and affiliates. All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BYCOPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHERTRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCHPURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT AMB’s PRIORWRITTEN CONSENT. All information contained herein is obtained by AMB from sources believed by it to be accurate and reliable. Because of the possibilityof human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under nocircumstances shall AMB have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, anyerror (negligent or otherwise) or other circumstance or contingency within or outside the control of AMB or any of its directors, officers, employees or agentsin connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) anydirect, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if AMB is advised inadvance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings, financial reporting analysis,projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinionand not statements of fact or recommendations to purchase, sell or hold any securities, insurance policies, contracts or any other financial obligations, nordoes it address the suitability of any particular financial obligation for a specific purpose or purchaser. Credit risk is the risk that an entity may not meet itscontractual, financial obligations as they come due. Credit ratings do not address any other risk, including but not limited to, liquidity risk, market value risk orprice volatility of rated securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS,MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN ORMADE BY AMB IN ANY FORM OR MANNER WHATSOEVER. Each credit rating or other opinion must be weighed solely as one factor in any investment orpurchasing decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study andevaluation of each security or other financial obligation and of each issuer and guarantor of, and each provider of credit support for, each security or otherfinancial obligation that it may consider purchasing, holding or selling.

4 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Page 5: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

US Securities Laws explicitly prohibit the issuance or maintenance of a credit rating wherea person involved in the sales or marketing of a product or service of the CRA alsoparticipates in determining or monitoring the credit rating, or developing or approvingprocedures or methodologies used for determining the credit rating.

No part of this presentation amounts to sales / marketing activity and A.M. Best’sRating Division employees are prohibited from participating in commercialdiscussions.

Any queries of a commercial nature should be directed to A.M. Best’s Market Developmentfunction.

September 9, 201852018 Reinsurance Market Briefing, Monte Carlo

Page 6: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Discussion Outline

Global Reinsurance Results and Trends

Global Reinsurance Market Capacity

Global Reinsurance Market Evolution

Global Reinsurance Sector Outlook

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 6

Page 7: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Segment Outlook – Global Reinsurance

7 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Headwinds TailwindsIntense competition Cession rates increasingIncreasing interest from third-party capital

Cat losses temporarily stabilise rates

Earnings stabilise but remain under pressure

Favourable reserve development,but waning

Excess capacity hinders further improvement

Strong risk-adjusted capital

Potential for increased inflation Increase in interest ratesM&A

Although capitalisation remains strong and rate deterioration temporarily halted, pressure on margins continues. Over the intermediate term, returns for some reinsurers will fall short on a risk-adjusted basis. Maintain negative market outlook.

Page 8: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global ReinsuranceResults and Trends

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 8

Page 9: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

U.S. Growth Accelerates in 1H

3

4

5

6

7

8

9

10

11

-6

-4

-2

0

2

4

6

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

GDP (%) CPI (%) Unemployment Rate (%)

GD

P &

Infla

tion

(CPI

) (%

)

Une

mpl

oym

ent R

ate

(%)

U.S. GPD Growth, Inflation and Unemployment

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 9

Page 10: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Central Bank Base Lending Rates

-1

0

1

2

3

4

5

6

7

8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

(%)

China

ECB

Japan

UK

US

2018 Reinsurance Market Briefing, Monte Carlo 10 September 9, 2018

Page 11: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global GDP Growth – Major Economies

-6

-4

-2

0

2

4

6

8

10

12

14

16

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

(%)

China France Germany Japan United Kingdom United States *Forecast

11 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Page 12: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

2017 represented the most significant year for catastrophe losses since 2011

Hurricane Harvey, Irma, Maria combined with Earthquake in Mexico and Wildfire in California produced industry losses in the range of USD 80 to 100 billion.

Despite timing of these events, negative reserve surprises have been limited thus far

12

Global Reinsurance Market Trends

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Page 13: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market TrendsOverall 2017 catastrophes amounted to an earnings events as rated balance sheets emerged flat for the year.

Alternative capital did participate in the events in a meaningful way resulting in collateral locks prior and through the 1/1 and mid year renewal periods

Alternative capital investors were NOT hindered by the losses and brought additional capacity to the market for the renewals.

13 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Page 14: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market TrendsOptimism

that followed quickly faded

as January renewal

negations progressed.

Significant push back from Clients not impacted by

losses. But hope lingered into the

June / July Renewal.

Overall, reinsurance pricing stabilized. More

pronounced improvement in

underlying business

As a result pricing is not optimal for certain classes and structures but there are opportunities out there...

14 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Page 15: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Total Economic and Insured Losses (USD billions)

2018 Reinsurance Market Briefing, Monte Carlo 15

Source: Swiss Re Institute

2017 2016 Annual Change (%)

10-YearAverage

% of 10-Year Average

Economic Losses

Economic LossesNatural Catastrophe 300 178 69% 178Man-made 6 10 -42% 12

Total 306 188 63% 190

Insured Losses

Natural Catastrophe 131 56 133% 51 29%Man-made 5 8 -45% 7 58%

Total 136 65 110% 58 31%

September 9, 2018

Page 16: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market Trends

55.9% 56.2% 56.2% 60.6%

76.5%

61.1%

31.9% 33.5% 34.2%34.7%

33.6%

33.6%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0%

20%

40%

60%

80%

100%

120%

2013 2014 2015 2016 2017 5yr Avg

Expense Ratio

Loss Ratio

Loss ReserveDevelopment

Source: A.M. Best data and research

Global Reinsurance Sector – Combined Ratio

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 16

Page 17: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

87% 88% 90%98%

114%

2013 2014 2015 2016 2017

Combined Ratio by Reinsurance Sector

17 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

European “Big Four” U.S. & Bermuda Lloyd’s

87% 87% 91% 92%

109%

2013 2014 2015 2016 2017

89% 92% 92% 96%109%

0%

20%

40%

60%

80%

100%

120%

2013 2014 2015 2016 2017

Loss Ratio Expense Ratio

Page 18: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market Trends

13.0%

11.6%

9.5%8.3%

-0.3%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2013 2014 2015 2016 2017

Return on Equity Five-Year Average

Source: A.M. Best data and research

Return on Equity (2013 to present) and Five-Year Average

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 18

Page 19: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market Trends

16.2%14.7%

8.9% 8.1%

-7.3%

2013 2014 2015 2016 2017

13.1%

11.0% 11.5%

9.7%

2.7%

0%

5%

10%

15%

20%

2013 2014 2015 2016 2017

11.4%10.9%

7.5% 6.8%

-0.4%

2013 2014 2015 2016 2017

European “Big Four” U.S. & Bermuda Lloyd’s

Return on Equity by Reinsurance Sector

Five-Year Average

Source: A.M. Best data and research

2017

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 19

Page 20: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market TrendsGlobal Reinsurance Market

5 Year Average Return on Equity Less Reserve Development

Source: A.M. Best data and research

10.9%

8.3%

6.8%

4.5%

Composite at YE2016 Composite at YE2017

5 Year Average Return on Equity5 Year Average Return on Equity excluding Loss Reserve Development

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 20

Page 21: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global ReinsuranceMarket Capacity

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 21

Page 22: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market Capacity

Top 10 Global Reinsurance Groups –Non-Life

Top 10 Global Reinsurance Groups –Life

Munich Reinsurance Company

Swiss Re Ltd.

Berkshire Hathaway Inc.

Lloyd’s

Hannover Ruck SE

SCOR S.E.

Everest Re Group Ltd.

XL Group plc

Transatlantic Holdings, Inc.

PartnerRe Ltd.

Munich Reinsurance Company

Swiss Re Ltd.

Reinsurance Group of America Inc.

SCOR S.E.

Hannover Ruck SE

Great West Lifeco

Berkshire Hathaway Inc.

Pacific LifeCorp

PartnerRe Ltd.

Assicurazioni Generali SpA

Source: A.M. Best data and research. Ranked by unaffiliated gross premium written in 2017

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 22

Page 23: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market Capacity

Rank 1-1070.2%

Rank 11-2015.5%

Rank 21-307.2%

Rank 31-404.6%

Rank 41-502.5%

Life and Non-Life Reinsurance GPW Distribution by Ranking

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 23

Page 24: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market Capital

292 320 340 332 345 345 362

19

48 60 68

75 87 100

2012 2013 2014 2015 2016 2017 2018E

Convergence Capital

Traditional Capital

Estimate for Total Dedicated Reinsurance Capital (USD billions)

Notes and Sources: Estimates by Guy Carpenter and A.M. Best

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 24

Page 25: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Reinsurance Market Capital

Dedicated Insurance-linked Securities (ILS) Managers,

71bn

Reinsurance Sponsored Managers, 23bn

Direct Institutional Investors, 6bn

0

10

20

30

40

50

60

70

80

90

100

Convergence Capital(2018 estimated) (USD billions)

Notes and Sources: Estimates by Guy Carpenter and A.M. Best

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 25

Page 26: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Market Evolution

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 26

Page 27: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

“Global” Franchises

• Arch• Aspen• AXIS• Everest Re• Hannover Re• Lloyd’s• Munich Re• RenaissanceRe• SCOR Re• Swiss Re

ShelteredFranchises

• Allied World• Endurance(Sompo Intl)• General Re• MS Amlin• Odyssey Re• National Indemnity• Partner Re• Tokio Millennium Re• TransRe• Validus• XL Catlin

Franchises That Are Gone

• Ariel Re• Flagstone• Harbor Point / Max (Alterra)• IPC Re• Montpellier • New Castle Re• Paris Re• Platinum Re

What Does The Future Hold?

• Fidelis• Greenlight Re• Hamilton• Harrington Re• Humboldt Re• Kelvin Re• Lumen Re• Maiden Re• Third Point Re• Watford Re

Market Landscape ~10 Years In Time

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201827

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The Case for M&A

28 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Broader product capability

Broader geographic reach

Greater influence

Greater attractiveness to alternative capital

Opportunity for growth

Alternatively…M&A is the result of a strategic

opportunity

Page 29: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Alternative Capital

29 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Market is still largely

influenced by global leaders

M&A will continue

Alternative capital is driving change

Alternative capital is driving a great deal of structural change in the market

However, the market continues to be heavily influenced by the global reinsurance leaders

Page 30: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

The Drive for Efficiency

30 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

The market will

continue to become

more efficient as all

players strive to

become closer to

the client

Page 31: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Market Trends

Traditional Dual Platform

Controlthe client

Build primary business

Alternative Capital Platform

Manage or have a relationship with

alternative capital

Build fee income stream

Mergers &Acquisitions

Relevanceand size

Ability to be small and nimble with parental

protection

Strategy Evolution

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 31

Page 32: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Global Market TrendsPotential Opportunities

Cyber Insurance Flood Mortgage Terrorism InsurTech US Tax

Reform

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 32

Page 33: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

London and Regional Markets

Lloyd’s

Brexit Plans

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 33

Page 34: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Lloyd’s

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201834

Source: Lloyd's market results (31 Dec., 2017)

Combined Ratios by Class of Business10

2.3

106.

6

102.

9

108.

4

106.

4

108.

9

106.

9

92.3 10

3.4

102.

7

106.

2

92.6

111.

9

84.7

121.

7 131.

5

103.

7 121.

8

107.

7

114.

4

100.

6117.

2 127.

6

103.

1

122.

4

86.6

122.

3

102.

2

Reinsurance Property Casualty Marine Energy Motor Aviation

Accident Year 2016 Calendar Year 2016 post Prior Year Releases/Deficit Accident Year 2017 Calendar Year 2017 post Prior Year Releases/Deficit

GBP 6.1bn GBP 0.8bn GBP 0.8bn

100%

GBP 7.8bn GBP 6.4bn GBP 2.1bn GBP 0.5bn2017 Net Earned Premium

Page 35: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Lloyd’s

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201835

• Catastrophe losses –18.5 points on combined ratio in 2017 –not outside expectations given scale of events

• Underlying run rate combined ratio of business –> 100%

• Remedial actions – underway• A.M. Best Rating – Action affirmed (July),

FSR A, ICR a+, Outlook stable

Page 36: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Lloyd’s challenges

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201836

• Core lines of business – strong competition• Expense ratio – high compared to peers• Regional reinsurance hubs – growth reducing flow of

business to London• Market modernisation programme (TOM) –

being implemented• Appointments – senior management• Brexit

Page 37: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Brexit

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201837

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Brexit Plans

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201838

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Brexit

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201839

Major considerations for choice of domicile– tax regime– approach and expertise of

regulator– proximity to clients– access to talent– Location of existing

subsidiaries

– more insurers exploring Part VII transfers of existing EU businessto newly-created subsidiaries

Page 40: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Brexit

2018 Reinsurance Market Briefing, Monte Carlo September 9, 201840

London likely to remain one of the world’s leading insurance centres in Europe

Page 41: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Segment Outlook – Global Reinsurance

41 September 9, 20182018 Reinsurance Market Briefing, Monte Carlo

Headwinds TailwindsIntense competition Cession rates increasingIncreasing interest from third-party capital

Cat losses temporarily stabilise rates

Earnings stabilise but remain under pressure

Favourable reserve development,but waning

Excess capacity hinders further improvement

Strong risk-adjusted capital

Potential for increased inflation Increase in interest ratesM&A

Although capitalisation remains strong and rate deterioration temporarily halted, pressure on margins continues. Over the intermediate term, returns for some reinsurers will fall short on a risk-adjusted basis. Maintain negative market outlook.

Page 42: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

Q & A

September 9, 20182018 Reinsurance Market Briefing, Monte Carlo 42

Page 43: 2018 Reinsurance Market Briefing - AM Best€¦ · Global Reinsurance Market Trends 2018 Reinsurance Market Briefing, Monte Carlo. September 9, 2018. Global Reinsurance Market Trends

2018 Insurance Market Briefing – Europe& Methodology Review Seminar

10 September 20172017 Reinsurance Market Briefing, Monte Carlo 43

Tuesday 6 November, 2018:2018 Insurance Market Briefing – Europe08:30 – 13:00 GMT, followed by lunchMethodology Review Seminar14:00 – 16:00 GMT

etc. venues St Paul's, London200 Aldersgate, London, EC1A 4HD

EMEA Market Overview ● Reinsurance ●Environmental, Social, and Governance ●Technology in Insurance Panel

Notable Developments since last year’s Best's Credit Rating Methodology Update ● BCRM –Key Changes, Impacts and Expectations ● Mock Rating Committee

There is no cost to attend the Briefing or Seminar, but registration is required as space is limited.