Versicherungswirtschaft: The market is soft, competition is tough. What are the current status and outlook for the reinsurance industry from your perspective?
Franz Josef Hahn: It may be still too early to predict the impact of this year’s hurricane season on global – leave alone European – rates.
The hurricane and earthquake events in Mexico may have destroyed 100 billion of reinsurance capital. That is around 20 percent of the industry‘s capital. This may trigger a rethinking of our industry when it comes to our approach towards Nat cat. Additionally, with earthquakes in Italy and similar events in developing markets, the topic of under penetration and relevance moves into focus not just for the emerging markets. With technology developing fast and changing business processes incumbent industry players need to adopt fast. The thinner profit margins of recent years paired with the efficiency gains possible through fast adoption of technology is reshaping the face of our industry.
Your business is cyclical. Currently we are in a downward cycle. What are your strategies in this particular phase?
We don’t track the market and can afford to be selective in our underwriting approach. There are still profitable reinsurance portfolios to be found with clients which are not adequately served by reinsurers geared towards pure analytics and short-termism.
Our cost-efficient business model, proven since the company’s start, enables Peak Re to trade profitably even in an environment of super-thin margin. The status of a non legacy player gives us the opportunity to belong to the early adopters of smart technology to serve our clients and even higher efficiency.
How much does the current market environment constrain your business activities?
We have successfully built the company in the current environment, thus there are no constraints.
Expertise in underwriting, global network, innovative products – what else does it need to be successful in the current market environment?
If you excel in these three disciplines you certainly fulfil key criteria for success. As major criteria for success I would call our corporate culture first. Entrepreneurial with aligned interests. Besides, Peak Re would add two more components: our cost-efficient set-up and the capital diversification which we offer. Firstly, due to the lean set-up we are able to write profitable business in an environment where others may only make a loss and remain below their return on capital targets…