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Business models in reinsurance
Munich Re
Re's
s positioning
Torsten Jeworrek
6 September 2009
Monte Carlo
Trends in reinsurance
Short term trends
Short-term
ƒ Decrease in capacity and resulting hardening of the markets, particularly
ƒ in veryy capital-intensive
p
or highly
g y exposed
p
segments
g
((e.g.
g nat. cat.))
ƒ in classes of business severely affected by the economic crisis (such as
credit or D&O)
ƒ Pressure on primary insurance premiums due to the recession and reduced
availability of income to spend on insurance
Æ Increased pressure on reinsurance rates
Long term trends
Long-term
ƒ
ƒ
ƒ
ƒ
ƒ
Growing exposures
More complex risks
Changes to known risks
Emergence of new risks
g importance
p
of enterprise
p
risk management
g
and efficient capital
p
Increasing
management
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06.09.2009
2
Emerging business models
Service reinsurer
ƒ Sustainable capacity
ƒ Lead in major
programmes
ƒ Strong risk modelling
expertise
p
ƒ Service in product
development
and pricing
ƒ Pronounced market and
client proximity through a
network of international
branches and
subsidiaries
Low-cost capacity
provider
Risk transfer to the
capital markets
ƒ Little or no service
ƒ Mostly in the role of
follower
ƒ In some cases
opportunistic
pp
market
strategy
ƒ Sometimes with a focus
on individual classes or
market segments
ƒ Pure capacity provider
ƒ Assumption of risk
through ILS or sidecars
ƒ No service
ƒ No intrinsic underwriting
g
expertise
ƒ High level of security
ƒ Dependent on third-party
models
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06.09.2009
3
Increasing complexity and demand for flexibility
Demand trend
Examples
Balance-sheet management and
financing
ƒ
ƒ
ƒ
ƒ
Management of cost of capital and leverage
Capital flexibility over the insurance cycle
Optimisation of balance
balance-sheet
sheet figures
Financing of growth
Changing and complex risks
ƒ
ƒ
ƒ
ƒ
Higher and more frequent claims due to climate change
Growing interdependencies between risks
New court decisions regarding long-tail claims
Medical inflation
Insurability of new risks
ƒ
ƒ
ƒ
ƒ
New technologies (internet viruses, renewable energy)
Extended business interruption covers
Longevity
Obesity
Efficient coverage
g of
standardised risks
ƒ
ƒ
ƒ
ƒ
Motor quota shares
g insurance
Buildings
Cat XL
Mortality
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Munich Re's positioning for the future
Clear positioning as a service reinsurer
ƒ As a comprehensive provider of all types of reinsurance and capital market
solutions
ƒ Consultancy and services for clients
ƒ Transformation of risk knowledge into individual solutions for clients
ƒ Substantial investments to continously enhance actuarial and underwriting
expertise
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06.09.2009
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The three cornerstones of Munich Re's enhanced
positioning
A high level of security and
individual reinsurance
solutions
(Re)insurance
of complex and new
risks
Tapping into new
client groups
Efficient reinsurance
of standard risks
Expanding the limits of
insurability by developing new
coverage concepts
Highly specialised primary
insurance niche business;
Cooperation with MGAs
First-class modelling
Public-private partnerships
Development of databases and
replacement of missing data
using our top expertise
Insurance pools
Customised solutions for
risk and balance-sheet
management
Enterprise risk management
Solvency II / ALM consultancy
services
Risk transfer to
capital markets
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06.09.2009
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"Münchener Rück" now worldwide Munich RE
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Broader business base in reinsurance
Two business models on one base
Munich Re
Munich Re
Risk Solutions
Reinsurance solutions worldwide
Specialised B2B primary insurance
solutions out of reinsurance
Solidity and specialised risk know
know-how
how
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Examples: Services for clients
ƒ Consultancy,
y, workshops
p and tools on Solvency
y II
ƒ
PODRA (Pillar One Dynamic Reinsurance Analysis) – Calculation service
using the PillarOne open-source modelling software to determine the riskbased capital requirement under Solvency II
ƒ ALPHA (Asset Liability Portfolio Hedge Administration): Offers clients holistic
support with the asset-liability management of their individual portfolios
ƒ MIRA (Munich Re Internet Risk Assessor): An internet-based risk assessment
and
d rating
i tooll that
h combines
bi
optimised
i i d workflow
kfl
efficiency,
ffi i
a user-friendly
f i dl
interface and Munich Re’s global underwriting knowledge
ƒ Allfinanz: Highly efficient platform for processing new life business allowing
underwriting automation at the point of sale
ƒ Enterprise risk management: Assisting clients in establishing ERM structures
and systems
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Examples: Product innovations
ƒ New types
yp of cover for expanded
p
contingent
g
business interruption
p
losses
ƒ Performance cover for photovoltaic panels
ƒ Comprehensive solutions for construction projects: Risk assessment
assessment, primary
insurance know-how, reinsurance capacity, certification and risk inspection
services from a single competent source Æ Dedicated construction projects unit
has been set up
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Examples: New groups of clients
ƒ The “Agro System”: A crop insurance solution for farmers based on a public-private
partnership involving the government, the agricultural sector and the insurance industry
ƒ Caribbean Catastrophe Risk Insurance Facility (CRIFF): Parametric earthquake and
windstorm
i d t
cover ffor 16 island
i l d states
t t iin th
the C
Caribbean
ibb
b
based
d on a public-private
bli
i t partnership
t
hi
ƒ Structuring and involvement in pharma and terrorism pools
ƒ Insurance of large industrial risks by a dedicated unit via Group-owned fronters
ƒ Roanoke: One of the largest marine insurance underwriting agencies and brokers in the
USA Expertise combined with an expanded distribution network in the USA helps to provide
USA.
better solutions for clients
ƒ HSB: One of the largest insurance and inspection companies for engineering risks in the
USA – A perfect match of expertise adds value for Munich Re and HSB clients
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Munich Re's new look
ƒ Our solution-oriented
approach is reflected in
the new look of
advertisements and
publications.
ƒ The new look stands
for an enhanced value
proposition.
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Enhanced value proposition
Capacity
Reliability
Munich Re – Much more than the sum of its parts
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THANK YOU FOR YOUR INTEREST.
Torsten Jeworrek
(c) 2007 Münchener Rück
kversicherungs-Gesellschaft (c) 2007 Munich Reinsurannce Company