CCR Re has a not-so-secret weapon in the form of its new partners as the French reinsurer gears up to tackle the two areas of key concern at the ongoing 1/1 2024 renewals.

This was the view of Hervé Nessi (pictured), chief underwriting officer at CCR Re, as he spoke to Intelligent Insurer. 

Outlining the two main areas he is watching closely for 1/1, Nessi says the first issue is natural disasters and the frequency in 2023 of what were wrongly called “secondary perils”.

“We benefit from the long-term support of two robust French mutual insurers.” Hervé Nessi,He explained that there are three reasons the “secondary” label is outdated. “First, these events are not, strictly speaking, integrated into the price which is based on the occurrence of a single and extremely rare event. The low frequency corresponds with the low rate on lines with return periods of 50 to 100 years. 

“Second, catastrophe reinsurers’ retrocessions are calibrated on very rare events and therefore all ‘secondary’ events will remain generally within the reinsurers’ retention,” he explains.

“Third, after large claims the relevance of models is often examined because they must be readjusted post-disaster. Imagine the even more dramatic human and financial impact the Turkish earthquake would have had if it had occurred in the Istanbul area. It would have been a total loss to all the programmes.”

Following the higher-than-expected frequency of secondary events, particularly in 2023, and despite a very significant increase in reinsurance conditions in the same year, CCR Re has not seen new capacity created for the market.

Nessi said this is indicative of a certain mistrust of investors towards the sector.

However, in this context CCR Re stands out since it is one of the only companies to have found two partners in 2023 to support its development, in the form of SMABTP and MACSF, he said. 

“The agreement is mutually beneficial for our new shareholders and for us,” he says.

For SMABTP and MACSF, the new partnership represents an opportunity to deploy their excess capital in a very international activity. Nessi explains that the choice of CCR Re by these new partners is particularly relevant because the reinsurer’s historic multi-country, multi-line underwriting model provides a high level of diversification, not only in relation to the catastrophe business but also with its core business. 

For example, the reinsurer is active in more than 100 countries, with business lines including life and health, property and casualty, and specialty lines. 

The advantages for CCR Re are myriad. “We benefit from the long-term support of two robust French mutual insurers,” Nessi adds.

“For the next renewals, not only for catastrophe business but also for the other lines, we will stick to our usual approach. For years we have been campaigning and saying that the sector needs stability and serenity. We must stop extreme ups and downs on rates that are targeted on clients that have had losses. 

“We have to strive for moderate but constant increases. Our clients must remember especially when talking about catastrophe, that they are part of a worldwide mutuality, all members of an international group of solidarity.”

Retrocession concerns

The second area of concern that Nessi highlights is around retrocession.

“We expect proportional growth in all active countries.”Last year, the renewal of CCR Re’s protections was very late and extremely hard in terms of price and countries and perils exclusions, he says, adding that “timing is a concern for us” for 1/1 2024. The growing protection gap between acceptances and retro scopes is another concern. For example, strike, riot and civil commotion (SRRC) or hail, are now usually excluded from the covers, according to Nessi. 

“In the past, the exclusions of these risks did not matter as their occurrence did not affect the per-event programmes, while remaining within the deductible. Now, with inflation and the growth of insured values, we have seen that the secondary perils can become an issue.”

Nessi says the reinsurer has been conducting interesting discussions with its retrocession providers since the beginning of the year. 

“We feel that we have a little more certainty on these subjects. Thus, we hope to know before underwriting on the acceptance side what will be covered and what will not on the retro side.”

Ambitious plans

By 2027, the company’s turnover target is €2 billion ($2.1 billion) with a 10 percent return on equity.

And CCR Re expects 2024 will be a year that offers many reasons to be satisfied, according to Nessi. On top of this, the reinsurer has new capacities to achieve a new ambitious five-year business plan. 

“We intend to pursue our strategy, because the successes it has brought us in the last five years have confirmed its relevance. Geographically, we have no plans to change our current underwriting policy. We are active in more than 100 countries, but we still do not cover the US, Australia, and New Zealand, nor a small number of countries that are too uncertain. 

“We expect proportional growth in all active countries but certainly more in areas that we have recently opened such as Latin America, and Asia, which include new countries, and Africa.”

CCR Re is a middle-sized reinsurer, Nessi says, which seeks to position itself in cedants’ minds as a relevant and credible alternative to the large global reinsurers. It plans to do this with a relational approach where it underwrites clients with an “across-the-board” participation rather than a transactional approach where it underwrites business, he concludes. 

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