Post on 21-Sep-2020
An underwriter's day in non-life reinsurance
Sven Althoff, Managing Director
16th International Investor's Day 2013
Frankfurt, 23 October 2013
Strong client orientation in a structured framework
1 An underwriter's day in non-life reinsurance
Underwriting skills
Strategy
Underwriting guidelines
Tools
CRM approach
Business partner
Underwriter
Our strategy guides our actions. . .
2 An underwriter's day in non-life reinsurance
Non-life reinsurance
Our
strategy
We co-operate predominantly with R/I brokers (especially in the non-prop. sector)
We attach great value to direct contacts with our ceding companies
We combine high level of technical expertise with sound CRM & offer
a full range of products according to our clients’ needs
We achieve higher RoE margins than our peers:
xRoCA: ≥2%
EBIT margin: ≥10%
C/R: <96%
Sophisticated control of aggregates
Conservative reserving level is of utmost importance
Use of retrocessions to reduce volatility and protect our capital
Secure and further develop already attained market positions, while keeping
to our margin requirements Sales
channels
Self-
image
Profit
contribution
Clients and
products
Risk
management
Markets
We successfully meet all individual client and market needs
. . . and is integrated in the general underwriting guidelines
3 An underwriter's day in non-life reinsurance
General underwriting guidelines
• Provide a framework for those authorised to write non-life
reinsurance or direct insurance business in compliance with
all applicable external and internal requirements
Special underwriting guidelines
• Provide an individual framework for underwriting centres
Exposure management guideline for NatCat business
• Sets framework conditions for underwriting without
overexposing the capital base within the bounds of risk
budgets
They assist in writing profitable business without overexposing the capital base
However, we aim for the greatest possible delegation of tasks and authority
Our underwriters are passioned and committed
4 An underwriter's day in non-life reinsurance
Their capabilities
Experienced
Trained in-house
Speak the
client’s language
Analytical
skills
Team workers
Travel to
meet clients
Familiar with
our tools
Loyal
Empowered
Take consistent
decisions
Responsible for
marketing and
underwriting
Provide
broad support
Accessible and
respond fast
5 of our underwriters are within the top 11 leading R/I underwriters in EU*
* Source: Gracechurch
Meetings
Conferences
Client feedback
Cross-Selling
Conceptual ideas
Feedback,
acquisition
Client data
Market
environment
Portfolio
management
Coverage
Technical price
Sanction
screening
Analysis
Market price
Commission
Written line
Structure
Contract language
Terms of trade
Firm order
terms
Signed line
Placement slip
Contract wording
Premium
(instalment)
Data encoding
Aggregate
monitoring
Electronic filing
Cash monitoring
Data quality
Main steps of the underwriting process
5 An underwriter's day in non-life reinsurance
An annual cycle
Strategy and
research
Negotiation Transaction Administration
Controlling
Our working day starts by passing this door
6 An underwriter's day in non-life reinsurance
33 nationalities working together in Hannover
Who are our (potential) clients?
7
Insurance companies
• Stock listed insurance companies
• Mutual insurers
Pools
Captives
Governmental entities
Risk retention groups
Underwriting agencies
Broker
An underwriter's day in non-life reinsurance
A dedicated broker market, but 1/3 of our business is written on a direct basis
We meet our clients regularly
How do we find a new client?
8
Strategy
• We have ambitious profit and growth targets
• We are a preferred business partner
Market research
• Market potential, development and profitability
• Analysis of competitors
Segmentation
• By region, class of business, customer group and distribution channel
“Travelling underwriter”
• Ensures constant contacts
Working with brokers vs. direct business
• Distribution and services
Satisfied clients bring in new clients
The subscription market: the role of co-(re)insurance
An underwriter's day in non-life reinsurance
Our CRM strategy provides framework for coordinated client-directed activities
High quality of data is an important competitive advantage
9
Administrative tools, especially designed for our business needs
• Re7 treaty
• Re7 frontend facultative
Data Management Systems: revision-safe archiving
• Submission
• U/W decision sheet
• Further documentation
NatCat steering tools
• Anker
• GEM
Compliance related tools
• Sanctions screening tool
Pricing tools
An underwriter's day in non-life reinsurance
State of the art tools and systems
Quotation department secures consistent approach to pricing
10
A large number of pricing tools have been internally developed by our actuarial
quotation department. Amongst others, these are used to price the following
treaties/lines:
• Proportional short tail (e.g. property)
• Proportional long tail (e.g. motor liability)
• Non-proportional short tail
• Non-proportional long tail
• NatCat XL
• Stop-loss
• Multi-line
• Individual tools for specialty business
− Credit
− Agriculture
− Facultative (e.g. engineering, MedMal, pharma, workers’ comp., PI, D&O, energy, mining, GTPL,
Bankers’ Blanket Bond, Recall-Crisis Management, fine arts)
An underwriter's day in non-life reinsurance
Pricing tools
Ensuring the quality of our portfolio
11 An underwriter's day in non-life reinsurance
Step 1
Step 2
Step 3
Determining the expected loss
Historical loss and exposure
analysis
Future inflation
Changes in the quality of the
underlying risk
Changes in the quantity of the
underlying risk
Discounting of future cash flows
Estimating expenses
Commission
Brokerage
Internal administration
Pricing for the targeted return
Quantity of capital allocated
dependent on volatility of
underlying business and its
contribution to diversification
Return on equity expected by
shareholders
Mix of capital
Our quotation process in non-life reinsurance
Regular review of: loss cost trends
inflation
Most important non-life
distribution channel:
brokers variable cost
We constantly monitor our business
12 An underwriter's day in non-life reinsurance
Proportional1) Non-proportional2)
Conditions for Hannover Re still favourable
-100%
-50%
0%
50%
100%
04 05 06 07 08 09 10 11 12 13
0%
20%
40%
60%
80%
100%
04 05 06 07 08 09 10 11 12 13
Deterioration Unchanged Improvement Net change (improvement - deterioration)
As at January 2013 renewals
1) Comparison of commission 2) Comparison of Rate on Line (RoL)
0%
20%
40%
60%
80%
100%
04 05 06 07 08 09 10 11 12 13
-100%
-50%
0%
50%
100%
04 05 06 07 08 09 10 11 12 13
Why do clients buy reinsurance from us?
13
Strong balance sheet
Highly rated by rating agencies
Competitive
Consistent
Exposure pricing
• Deterministic methods: e.g. first loss scales, increased limits factors
• Probabilistic methods: e.g. modelling of natural catastrophe exposure
Experience pricing
• Burning cost
• Assumptions on e.g. inflation
• Shifts in underlying portfolio: individual vs. market experience
Delegation vs. committee underwriting
An underwriter's day in non-life reinsurance
Our rating and pricing are essential, but. . .
What makes us somewhat different?
14
Transparent approach
Upfront communication what can and cannot be delivered
Clear message on risk appetite
Reliable in fulfilling promises of support
Service standards
Timely quotations
Timely turnaround of contract documentation
Timely turnaround of special requests during the contract period
Timely and reliable claims payment
Value creation
Long-serving client teams
Capacity for all lines of business
Solution-minded approach which offers alternatives
Ability to take wider client relationship into account
An underwriter's day in non-life reinsurance
. . .our service orientation makes us a preferred business partner
Disclaimer
This presentation does not address the investment objectives or financial situation of any particular person or
legal entity. Investors should seek independent professional advice and perform their own analysis regarding
the appropriateness of investing in any of our securities.
While Hannover Re has endeavoured to include in this presentation information it believes to be reliable,
complete and up-to-date, the company does not make any representation or warranty, express or implied, as
to the accuracy, completeness or updated status of such information.
Some of the statements in this presentation may be forward-looking statements or statements of future
expectations based on currently available information. Such statements naturally are subject to risks and
uncertainties. Factors such as the development of general economic conditions, future market conditions,
unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the
actual events or results to be materially different from those anticipated by such statements.
This presentation serves information purposes only and does not constitute or form part of an offer or
solicitation to acquire, subscribe to or dispose of, any of the securities of Hannover Re.
© Hannover Rück SE. All rights reserved.
Hannover Re is the registered service mark of Hannover Rück SE.