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Scor executive says 'risk appetite' key to reinsurers' growth

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BOCA RATON, Fla. — The reinsurance market is overcapitalized and highly competitive, but there are still opportunities for reinsurers to grow their business, a leading European reinsurance executive said.

Particularly for reinsurers with a global reach, there are segments of profitable business to be found, said Victor Peignet, CEO of Scor Global P&C S.E., a unit of Paris-based Scor S.E.

“The situation is not great but there are still a lot of opportunities, so we should not be overly demoralized about the business,” he said, giving the opening keynote address at the World Captive Forum in Boca Raton, Florida, on Tuesday.

But given the huge amount of capacity available in the market, executives at reinsurers must closely monitor the risks that their underwriters are taking on, he said.

“It's all about defining your risk appetite, defining your (enterprise risk management) framework and then associating your operations with that,” Mr. Peignet said.

Given the excess capital in the reinsurance market, reinsurers should be able to write more catastrophe exposures that are uninsured, such as flooding. But given the magnitude of the risks, they would have to be covered through a partnership with governments, and attempts to form those partnerships have been largely unsuccessful, he said.

Reinsurers' ability to cover flood risks has been further hampered by an unwillingness of insurers and policyholders to view catastrophe risks from a global perspective, Mr. Peignet said.

For example, after Hurricane Katrina in 2005, insurers and policyholders not affected by the catastrophe resisted rate increases that reinsurers sought to impose based on the loss and their reduction in capital, he said.