“2007 will turn out to be an attractive underwriting year," says Max Capital CEO Marty Becker
“My biggest challenge was not screwing it up,” said Marty Becker, CEO of Max Capital in his eleventh month in the role.
Speaking at the Rendez-Vous de Septembre in Monte Carlo he acknowledged that he had taken the helm of the Bermuda reinsurer at a favourable time in the cycle. The industry saw record profits in 2006. In the run-up to another renewals, the challenges are far greater.
“There is no question that prices have been softening all year – most people have every expectation that this is going to continue,” said Becker.
Appetite for US property catastrophe reinsurance remains strong however. Becker said prices at the mid-year “Florida Book” renewals had remained firm.
“Everyone feels prices were stronger than had been anticipated and programmes were over-subscribed,” he said.
But softening, said Becker, was inevitable. “There’s nothing particularly unusual driving this one. The industry had several years of pretty robust results.”
Despite the softening market, Becker remains upbeat. “2007 will turn out to be an attractive underwriting year, as will 2008. In macro terms the industry is still doing pretty well.”
Diversification and growth through acquisition has been part of the Max Capital model. In April, the company bought a US-based excess and surplus lines company – Max Specialty.
“For Max, there are no diversification 'have to dos' – but there are diversification 'nice to dos',” he explained. The key, he said, was going into new sectors where there was existing expertise. “We won’t go into a new line without having a proven performer in that segment.”
Following a number of big M&A deals so far this year – the biggest being Scor’s buyout of Converium - further M&A activity will be continue to be on the agenda, is Becker’s prediction.
Asked about the recent flurry of M&A activity at Lloyd’s – the buyout of Talbot by Validus and Atrium by Ariel – he said activity would not be confined to any one market. “It will take place in London, the US and Bermuda,” he promised.