The executive said the market segment was experiencing a resurgence in claims activity and social inflation following the pandemic, and the carrier was “very cautious” in the class.
“We are very cautious around this line of business and have taken proactive actions in our portfolio to address it,” he said.
“Clearly, our clients are doing a lot as well to address the phenomenon of this increased exposure we see in the US.”
Meanwhile, the executive said there was still “room to improve from a returns perspective” in the property cat space, with the supply of capital remaining “disciplined” in the pursuit of risk-adequate underwriting.
The executive was speaking at a press conference at the Monte Carlo Rendez-Vous, where the carrier set out its early projections for coming renewals.
P&C reinsurance CEO Urs Baertschi said that, at this early stage, it appeared that the January 1 renewal was likely to see a continuation in improving underwriting conditions.
“In general, our expectation is that what we have seen over the last 12-18 months around the rebalancing of the risk sharing and the price adequacy, we expect that to continue,” the executive said.
Lot said the company did not have a “crystal ball” as to how long the positive rating environment would endure but that there was still room to improve on returns.
“We have still not seen capital influx, which means the supply is still what it is, and we have seen the supply very disciplined,” he said.
“Underwriting profit is at the core of our peers and Swiss Re, and, therefore, we are going to drive risk-adequate returns going forward.”
Baertschi said a convergence of factors was contributing to the rating environment.
“Urbanisation, higher values, inflation, climate change all come together to actually drive the expected costs we experience in our system,” he said.
Baertschi added that the industry had entered a “new normal” for nat cat risk, with nat cat insured losses at more than $100bn for the last six years on average.
Secondary perils are increasing in their share of the claims load, the executive explained, now representing half of all nat cat losses.
In the cyber space, Lot said the market was still “in its infancy” but growing rapidly, and the carrier was investing heavily in aggregation modelling.
“Contract certainty is really important here – the definition of what is malware, what is ransomware and what is actually warfare,” he said.
