Editor's comment: Bon Anniversaire, RVS

The annual Monte Carlo get-together beckons. The speed-dating tables are set in the Café de Paris; the extortionate suites are ready in the principality’s luxury hotels; the industry’s brokers have again failed to brush up on their restaurant French; and the world’s biggest reinsurers, together with hundreds of their cedants, prepare to descend on Monaco’s annual Rendez-Vous de Septembre.

This year marks the Diamond Anniversary – some 60 years – of the world’s biggest, glitziest reinsurance jamboree. Even the insurance market’s senior age demographic will struggle to recall that far back. This year’s Rendez-vous enjoys the personal patronage of His Highness Prince Albert II of Monaco, no less.

This year has presented myriad risk factors to debate when negotiating the next round of reinsurance placements. Reinsurance rates remain competitive, of course, but at last they look like flattening out, going on those renewals that have already taken place earlier in the year, having reached rate nadirs in some lines, and touching the previously elusive pricing floor in others.

The wider operating context has also gotten more interesting, in the proverbial sense of the word. The risks are more interwoven than ever, a point made at length by the World Economic Forum earlier in the year. The same goes for re/insurance exposures. Traditional property and catastrophe risk policies are now more closely aligned with risks across specialty lines such as energy, marine, and aviation, a weight of related casualty/liability business, as well as for the growing opportunities in emerging risks that the industry loves to talk about – climate, cyber, reputation, supply chain, business interruption, etc.

Political risks are very real, and not just confined to traditional volatile emerging markets such as Latin America, Africa and the Middle East. The West is going through its own identity crisis. In Europe, and for France particularly, Islamist terrorism risk is front page news. You can expect demand for such covers to rise accordingly, although as usual, plentiful re/insurance capacity will be ready and willing to meet it.

Regulatory and political risks abound. Brexit looks like taking years to happen, with little answer to questions such as passporting, contributing to lingering uncertainties across markets. Populist politics continues its dodgy rise to the top – personified by Donald Trump in the US, Nigel Farage’s Brexit victory in the UK and Marine Le Pen’s xenophobia in France. Regulatory implementation of Solvency II poses fewer questions than the creep of protectionism among politicians seeking power across the globe. For the reinsurance industry, which relies entirely on liberal trade policies and understanding tax regimes, this threat should be on the dashboard.

Negative interest rate movements across the West’s central banks are putting added pressure on underwriting discipline when the slim profits posted by insurers and reinsurers are making such dire investment returns. While a US recovery is still only gradual, China’s economic slowdown continues to affect African and Asian markets, making emerging market investments problematic for conservative re/insurers.

Political violence and political risk are on the up in Latin America, Africa, the war-torn Middle East and even Europe. Russia’s tussle with Ukraine has seen the first conflict since the 1990s Balkan Wars, and in Crimea the first forced annexation by a European power since the Second World War. Russia’s sanctions hit economy is in recession, like so many other energy-exporting countries, and remains a risk into 2017.

Reactions was the first trade title to serve the Rendez-vous event with live daily newsletters, going back to the 1980s (Garry Booth remembers), and the team will continue to serve the Rendez-vous with our dailies this year. For those attending in Monte Carlo, we hope you enjoy them, while for those in the industry left at home minding the shop, the dailies will also be made available online. You can also check out our exclusive CEO Forum supplement, bound in this issue. Check out some of the top names in the sector who contributed their thoughts for 2016.

So, please enjoy this month’s bumper 120-page special issue of the monthly magazine; Bon Anniversaire to the Rendez-vous; and we’ll see you in the Scor Lounge for the usual Monte nightcap.

David Benyon, Editor, Reactions

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