MS Reinsurance’s Wiest: Inflation risk will increase discipline in long-tail lines

Long-tail business is increasingly at the mercy of rampaging inflation, MS Reinsurance’s chief executive Robert Wiest has told The Insurer TV, and this will lead to increasing discipline at upcoming renewals.

He expects inflation risk will be top of the agenda in meetings taking place at this year’s Monte Carlo Rendez-Vous, traditionally the starting gun for pricing discussions ahead of 1 January.

Wiest has been at the helm of the business for nine months, taking over as CEO in January after leaving his previous role as COO at rival reinsurer Swiss Re.

“I expect that how to deal with inflation will play a big role in discussions in Monte Carlo,” Wiest told The Insurer TV, reporting live from the Rendez-Vous.

“Underwriters will be most disciplined in the lines which are impacted by inflation, and of course long-tail lines are most impacted. The scenario has shifted from last year: inflation is there and I think we’ll now see that inflation will remain for quite a while,” he said.

On natural catastrophe risk business, the picture is more enigmatic, he suggested.

“Some nat cat players will come back because the pricing levels are attractive. This is a bit more of an enigma, but definitely those lines will be approached in a more cautionary way,” Wiest said.

That caution has been reflected in the carrier’s own strategy. Wiest’s tenure, thus far, has seen it scale back its capacity deployed to catastrophe-exposed business, something he says has now been successfully accomplished.

“Throughout the past 1.1, 1.4, 1.6, 1.7 renewals, we brought our nat cat portfolio back to the levels we think are adequate. We do have the capacity, but it will always be deployed in the context of larger client portfolios, not anymore as a standalone capacity,” he said.

Wiest said he began at MS Amlin by taking stock of the company’s situation before defining a new strategy for the business, “to get to the full potential of the company”.

Rebranding is one of the more obvious parts of that new direction, he noted. Wiest spoke to The Insurer TV on the day MS Amlin AG unveiled a rebrand into MS Reinsurance, aiming to cement its identity as a pure-play reinsurer.

The business wrote $2.2bn in GWPs in 2021 and will continue to use the MS Amlin AG balance sheet as the risk-carrying entity.

“One of the elements is establishing a transformation programme, which we are now in the middle of. An important element of that is the rebranding to MS Reinsurance,” he said.

It refers to the capital strength of the company’s Japanese parent, he noted, but also clarifies the company’s strategy as a pure reinsurer among its sister entities.

“Better positioning in the market comes via the rebranding, so MS Reinsurance, simply because the name tells the clients and the market who we are and what we are doing. We are a pure-breed reinsurer. So, there’s no confusion when you look at the name,” Wiest said.

Another aspect of change comes in the form of Transverse, the hybrid fronting carrier acquired by Mitsui Sumitomo Insurance Company for $400mn in August this year. That deal potentially opens up new North American business previously unseen by the London and international (re)insurance business.

However, Wiest said how much business would flow from the acquisition was still unclear, in part due to rules around the US base erosion and anti-abuse tax, which can lead to paying tax twice on business between two entities owned by the same parent.

“We still need to understand what the final setup will be post acquisition, and then we’ll see whether more business is flowing to us. In principle, as long as the business is within our risk appetite, of course, we’ll take it. But there’s still some work that needs to be done,” he said.

Watch the full interview with Robert Wiest, filmed on the balcony of The Insurer TV’s pop-up studio suite in the Hôtel de Paris during the Monte Carlo Rendez-Vous. Click for more on: