MS Re’s Wiest: Capacity is there at the right price

After two years of tighter market conditions, primary insurers will be looking to offload some of the risk they are holding on their balance sheets to reinsurers, according to MS Reinsurance’s Robert Wiest.

However, Wiest acknowledged that price disagreements remain one of the big topics at this year’s Rendez-Vous in Monte Carlo.

“I call it a balanced market, meaning capacity is there at the right price,” he told The Insurer TV. “But the primary insurers now have a choice they want to take on board, that will be the interesting part.”

The MS Reinsurance CEO said conditions during the last two renewal seasons drove primary carriers to hold “a lot” of risk on their balance sheets, primarily for cat lines but also across other classes of business.

He also highlighted the corporate finance and risk management element. “How much have the attachment points increased, how much risk do you have to maintain on your own balance sheet, and what is your own risk appetite here?”

Referring to MS Reinsurance's latest results– which included a combined ratio of 89.7 percent for the first quarter of the fiscal year, a 4.5 percentage point improvement over the same period last year – Wiest explained that favourable market conditions had contributed but the primary driver of the improvement had been the re-writing of its book.

“You might remember last year we talked about repositioning MS Reinsurance, and we successfully managed that. That then led also to the drop of the combined ratio,” he explained.

Commenting on US casualty, Wiest said MS Reinsurance did not necessarily see a need to retrench from the class, “which a lot of other companies are having to do in the soft cycle”.

He added that the reinsurer’s favourable view of the US casualty market was down to its lack of a legacy portfolio.

“Back then we were really small, so we don't have to deal with that question. So we can look with a fresh pair of eyes at the current market.”

Wiest also discussed the outlook for agriculture insurance as rising geopolitical risk adds to food security issues.

“It's one area where we have a particular approach, because that's one area where we have a lot of underwriting expertise,” he explained.

Wiest argued that agriculture insurance has always been a combination of government and private sector efforts and that that is set to continue in the current environment.

He said MS Reinsurance’s motto – “we do what we say” – was very much a differentiator relative to peers.

“Because this was part of the beginning of our journey, since the rebranding, it's by now very much part of the DNA,” he said.

”In particular, in this renewal, it will be truly put to the test the first time because this renewal, I believe that clients have a choice, which was not the case the last two years.”

Watch the 5-minute interview with MS Re’s Robert Wiest to hear more on: