‘Loyal’ mutuals are reinsurers’ preferred customers in a soft market

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Mutual insurers have found themselves in a prime position to capitalise on changes in the traditional reinsurance market, according to Willis Re.

Changing distribution models coupled with numerous alternative capital sources has left many reinsurers concerned over their existing portfolios and their access to future growth.

This provides mutual insurers with the perfect opportunity to strengthen their existing relationships with traditional reinsurers and to forge new ones.

“Traditional reinsurers are aware that while some larger commercial buyers are reducing their use of reinsurance in this phase of the reinsurance cycle, mutual buyers value long-term sustainable relationships throughout the entire cycle,” said Willis Re executive vice-president Robin Swindell. “This is the perfect time for mutuals to demonstrate that they are reinsurers’ preferred customers.”

Mutual insurers have a unique ownership structure where policyholders, not external shareholders, are the ultimate owners. This means they have less access to other forms of capital, and as a result, mutual insurers often heavily rely on reinsurance to provide them with additional capital to deal with catastrophes and large losses.

“Mutual insurers are in business for their members for the long term and should receive the recognition they deserve from reinsurers,” said Willis Re executive vice-president John Haydon. “Like mutuals, reinsurers should never leave their loyal customers in the lurch.”

“Seismic changes occurring in the traditional reinsurance market are favourable for mutual insurers,” said Willis Re chief executive John Cavanagh. “Willis Re has always been a strong advocate of the long-term business models characterised by mutual insurers, and will continue to provide analytical and transactional support to our clients in this important market.”