The reinsurance broker used its symposium at the start of the Baden Baden meeting to discuss alternative reinsurance structures for meeting capacity needs and the inflow of new capital.

Guy Carpenter hosted its Reinsurance Symposium in Baden-Baden on October 22, which addressed a theme of “The rise in demand for alternative solutions”.

Symposium photo

Senior industry figures from the insurance, reinsurance and investment sectors assessed the dynamics of the reinsurance marketplace in the run-up to the 1 January 2024 renewals. 

Among the issues they covered included exploring how buyers are responding to challenging market conditions and how the continued upward trajectory in pricing is creating opportunities for the development of alternative structures to meet capacity needs and facilitate the inflow of new capital.

Symposium speakers included: Laurent Rousseau, CEO of Europe, Middle East & Africa and global capital solutions, Guy Carpenter; Thierry Léger, CEO, SCOR; Eveline Takken-Somers, lead portfolio manager ILI, PGGM; and Burkhard Keese, chief financial officer, Lloyd’s.

Representing Guy Carpenter, Rousseau provided an overview of the reinsurance market, addressing the factors that led to the significant pivot in rates at the previous 1/1 renewal.

He explored how current dynamics are reestablishing the core function of reinsurance as a mechanism for managing severity rather than frequency, and highlighted how conditions are primed for an increase in the use of alternative capital and alternative reinsurance structures to meet clients’ risk requirements.

“In today’s world, it is imperative that we establish clear alignment between all market stakeholders. We must always ensure that we deliver value for insurers and their insureds,” said Rousseau.

SCOR CEO Léger explained how alternative structures have become a core component of SCOR’s strategic approach and highlighted their intrinsic value in facilitating more effective capital management solutions.

Léger said: “At SCOR, we tailor solutions to the needs of our clients to help them optimize their capital management in the most efficient way. We can build on decades of experience, data and client relationships.

“We also develop long-term risk partnerships with alternative capital providers in SCOR overall retrocession. Alternative solutions are an integral part of our new Strategic Plan Forward 2026,” he added.

Takken-Somers provided the investor perspective on the investment potential afforded by the reinsurance market and outlined the company’s strategy in relation to Insurance Linked Investments.

On the issue of aligning the interests between investors and reinsurers, she said: “Today, alternative capital is structurally embedded into the reinsurance industry. It has grown to a significant size and level of importance and will continue to grow if the following conditions are met.

“Firstly, there needs to be sufficient alignment with traditional capital so that investors are not having to take on risks that the industry is not willing to take on. Secondly, alternative capital needs to achieve sustainable returns. In recent years, like traditional capital, return objectives for alternative capital have not been met,” Takken-Somers added.

Keese used his presentation at the symposium to outline the success of the Lloyd’s market’s London Bridge 2 vehicle in enhancing the accessibility of the market to the investment community, emphasising its ability to match investor needs with those of underwriters.

“The commercial insurance market must continue its progress towards becoming a more transparent and efficient place to do business to deal with upcoming challenges, like the transition to net zero,” Keese added.