Swiss Re’s Lot: Sustainable profitability key to long-term partnerships

While the ongoing impact of Covid-19 dominated much of the conversation during virtual Baden-Baden discussions this month, issues around large man-made losses, climate change and the low-yield environment contributed to “complex conversations” around renewals.

Speaking to The Insurer, Gianfranco Lot, Head Globals Reinsurance at Swiss Re, said: “[These topics] typically lead to a discussion around performance and around the business itself and the upcoming renewals, making those conversations quite complex.”

Focusing specifically on commercial insurance, which is a significant source of the risks ceded under the reinsurance treaties with his clients, Lot said the group continues to look at this area “very carefully” given performance in this sector, and is optimistic about what he’s been seeing from the commercial insurance market.

“Most of our clients have taken drastic underwriting actions over the past couple of years to improve the quality of the underwriting, their portfolio and overall performance in that segment and we look forward to seeing some of the benefits finally flow through to reinsurers,” Lot told The Insurer during a video interview.

Lot also explained that Swiss Re is constantly reviewing its own performance to ensure portfolio optimisation, pretty much in the same vein as its clients. “We are, so to speak, in the same boat,” commented Lot.

“We are looking at our own portfolio making sure that we address its performance and we ensure that over time, we have an adequate return on the risk capital that we will deploy and also, we have invested quite a bit of time and money into data to help with this,” he said.

Both data collection and the interpretation of data is a core component to Swiss Re’s operations and value proposition.

“We have partnerships with our clients, but also with data providers to ensure we stay ahead of the curve in terms of knowledge when it comes to commercial insurance and the risk landscapes that go with it,” Lot added.

However, despite this insight, Lot acknowledges this renewal is set to be “difficult” but believes Swiss Re is well positioned to navigate these challenging discussions against a volatile market environment.

“We’re very fortunate to know our clients pretty well as we have known them for many, many years, sometimes decades. We know our clients’ needs and the stresses that they are facing – everyone is under pressure and we have to acknowledge that.”

He continued: “What we hear from our clients is that they are looking for a consistent and predictable partner – somebody who supports them going through this difficult phase but also going forward, a knowledge partner that helps clients with the uncertainties related to their risk landscapes.

Finally, we discussed the importance of both mental and physical health in teams in the wake of the disruption caused by Covid-19.

“The teams did an incredibly good job, I think, in making sure that it’s ‘business as usual’, despite working from home and despite the lockdowns. But I think this is really the major challenge moving forward, and we have to make sure that for the upcoming months we have an engaged team and that the ‘wellbeing factor’ of the teams remains high, because we are all fighting and dealing with this fatigue around Covid-19, and you know, [that mental and physical health] it’s something that is close to my heart,” he concluded.