This year's Baden-Baden meeting is likely to be much more focused on negotiation than the 2001 gathering.
Like many meetings towards the end of 2001, last year's Baden-Baden gathering was profoundly affected by the events of September 11. Generally seen as the event when the business of the forthcoming renewals season starts in earnest, last year's meeting saw a delay in these negotiations as the re/insurance market tried to come to terms with the impact of the US attacks.
Unlike other events, it was decided that the Baden-Baden meeting was to continue. Debate centred on how the World Trade Center (WTC) attacks had impacted the market. Delegates felt that demands for return on capital had increased, and that the hard market, already showing signs of a return in 2000 and a strong subject of conversation at the 2001 Rendez-Vous in the days preceding the WTC loss, was gathering momentum. In fact, although the renewals ran extremely late for the end 2001 deadline, ultimately the hardening was not as strong as anticipated and there was more capacity available than had been expected.
Since last year's gathering, however, other storm clouds have gathered to solidify the strengthening market. US liability is now one of the hardest classes to place, following the well-documented problems at Enron, WorldCom and the like, with D&O capacity proving elusive at best. Asbestos-related exposures are again impacting the industry, and US toxic mould claims are being seen by some commentators as possibly the next big liability exposure.
More recently, floods in central Europe and France have again highlighted massive industry exposures to property claims in Europe. These changing exposures are likely to be a major topic of conversation at the meeting, held in a German spa town which itself is subject to flooding. In fact, several years ago, Baden-Baden experienced serious flooding while the re/insurance industry was gathered there, not too dissimilar to last month's floods in southern France as industry executives met just a few miles away in Monte Carlo to start the renewals ball rolling.
One major difference between the Baden-Baden meeting and the Rendez-Vous is the breakdown of the delegate list. Although numbers are pretty steadily around the 2,500 mark in Monte Carlo, the proportion of third parties such as lawyers and systems providers increases each year.
By contrast, the people attending the Baden Baden gathering continue to be weighted towards the practitioner side of the industry, as serious negotiations begin to take place during the meeting. Whether this will continue to be the case is, as with many other industry gatherings, under debate, particularly as a growing timetable of side events is becoming more apparent year on year. Even so, it still continues to be the most deal-focused meeting in the calendar.
Some of the changes anticipated by last year's delegates to the Baden-Baden meeting have, indeed, come to pass. The increased emphasis on reinsurer strength as companies look at the viability of being able to collect in the future on programmes is a growing issue within the industry, exacerbated by the sweeping changes in ratings over recent months. In the months that have passed since the last gathering, several well-known reinsurers have shut up shop or severely retracted their position.
Some that were showing signs of distress before WTC have disappeared now, while others made a `strategic' decision to pull out in the face of market uncertainty. Although this seems to have stabilised recently, there are still question marks over the long-term viability of certain players, and related ratings frequently are showing negative creditwatches, if not downgrades.
Another topic of conversation last year, the move towards alternative risk transfer solutions as traditional capacity dried up, has not been as obvious in its manifestation, but there have been a number of deals which have not hit the headlines, showing that there is still life in the new horse yet. Likely the biggest difference between this year's meeting and last year's, however, is that the 2002 gathering will revert to the usual pattern of meet, debate and negotiate interrupted by the events of last year. How that negotiation will pan out, however, remains to be seen.