Everything still has a price
It is often the most innocuous questions that give you the most interesting insights.
And so it was with my end of 2019 encounter with James Vickers, Chair of Willis Re International.
Over the last 14 years he and I have consistently been the respective representatives of our organisations who didn’t mind working the graveyard shift of the few days between Christmas and New Year.
This means I have made the trip to have a chat with this reinsurance executive countless times.
Willis Re has been putting out its 1st View 1.1 renewal report for decades and going to interview a Willis Re executive during this period is one of the highlights of an otherwise exceptionally quiet time.
In the London insurance journalism world the 1.1 Willis Re interview is as Christmas as plum pudding and mince pies.
So this year’s trip to the Willis building on Lime Street was extremely familiar.
As usual the London Underground was eerily deserted and tourists outnumbered insurance folk as I strode out into the gloom at Monument station.
Familiar faces greeted me in reception and security and apart from a new naming scheme for the meeting rooms (they have changed to London pubs from global cities), the shining 23rd floor visitor suite had changed little since my previous encounter.
And Mr Vickers was as poised and polished as ever. He is immensely knowledgeable and hugely experienced. But what matters most to journalists is that he is personable, eloquent and assured, be it on a stage with a big audience or in front of a microphone.
James is always in control and is not the sort of interviewee to make rash statements or stray off script. He is a very safe pair of hands for an on-the-record encounter. We had a very lively and informative discussion about the renewals.
You can sample his composure for yourself on the podcast we recorded:
It was one of my last questions that convinced me that this market is in rude good health.
I asked Mr Vickers what the renewals had been like for reinsurance brokers. After all in a hardening market they would probably expect to have to work a little harder than usual?
I ventured that less consensus had probably meant more submissions, more calls, more debates and generally a harder time brokering than before.
He agreed - but only to an extent.
Yes, it had been harder finding a market clearing price because the easy consensus of a few years ago wasn’t there any more, but by and large once a firm order price had been negotiated, placements were pretty straightforward with only a few shortfalls.
Some reinsurers had changed view a little late in some classes and this had been a little frustrating, but everything was orderly.
Mr Vickers is always immaculately turned out, but this year he looked even fresher and more relaxed than usual.
He certainly looked nothing like a man who had been up half the night trying to beg borrow or steal lines to get a program home.
This was the telling fact sitting in front of me.
I was looking into the eyes of an expert market practitioner and they were clear and bright. They certainly weren’t ringed with dark shadowy bags, scored with worry lines or flecked with blood shots.
The market had done what it said it was going to do and there were few surprises.
Earlier I had asked if any of the more aggressive cedants, spoiled by over a decade of almost uninterrupted softening, had finally got their comeuppance.
So in other words, this market will continue to raise itself from the bottom for another year.
But it will do so ever so slowly and gently.
There will be no dramatic lift-off, only a little more caution over the casualty reserving position, laced with concern over the creeping of cat numbers.
The brutal fact remains that there is still sufficient excess capital for rate rises to be embraced by enough reinsurers as opportunities for profitable growth and not simply essential balance sheet repair.
This is nothing like an old-fashioned hard market.
In true hard markets there are deals that cannot be placed at any premium.
Today everything still has its price – and what is more, the price can easily be afforded.
Happy New year everyone!