Equator Re business review
“Equator Re remains critical to the management of the Group’s risk appetite and capital through its role in optimising divisional retentions and managing the Group’s innovative global ceded reinsurance program.”Jim Fiore
Group Chief Reinsurance Officer & President • Equator Re
Equator Re plays a central role in managing the Group’s external reinsurance by offering expanded catastrophe protections to the divisions and facilitating the Group’s external catastrophe reinsurance cover.
The significant majority of Equator Re’s assumed and ceded business is placed 1 January. Consistent with the external reinsurance market, the renewal season saw moderate pricing pressure similar to that experienced during 2015 and in‑line with expectations. Given the strength of our underwriting team, the robustness of our pricing tools and our significant reinsurance protections, we head into 2016 confident in our ability to deliver a strong underwriting result.
We continue to strengthen our organisational structure and technology platform which has allowed us to hone the service proposition to our divisional customers. We are pleased with our achievements and direction, and remain optimistic about our prospects.
2015 was a year of transition for Equator, with the transfer of a significant number of roles to the Group Shared Services Centre (GSSC) in Manila and the build-out of our Bermuda based management team.
While existing divisional reinsurance programs were broadly maintained, Equator Re now provides increased limits on the treaty reinsurances which are offered to divisions on a bespoke basis and purchases the Group per risk and catastrophe programs for its own account. Equator Re also benefits from participation in the Group’s aggregate reinsurance program as well as a significant Equator Re specific quota share.
A relatively benign catastrophe and large risk claims environment contributed to further softening in premium rates across most lines of business during 2015; however, rates were maintained or increased for loss affected programs. The increased gross premium associated with higher divisional limits has, however, been partially offset by reductions in underlying divisional exposures and premium rate movements.
Equator Re produced a satisfactory result for 2015 with an 89.0% combined ratio.
We successfully completed the restructuring of the portfolio, with Equator Re now providing increased limits on the property and casualty per risk and catastrophe treaty reinsurances offered to divisions on a bespoke basis. Consistent with this, Equator Re now purchases the Group per risk and catastrophe programs for its own account.
During the year Equator Re also successfully negotiated the commutation of some low level excess of loss casualty programs. This transaction reduces Equator Re’s exposure to further adverse prior accident year development and removes a large number of open claims from our balance sheet, thus improving the efficiency of our claims administration function.
Throughout the year, Equator Re worked closely with Group head office and QBE’s divisions to develop innovative solutions to new business opportunities. While not all such efforts have come to fruition, Equator Re continues to provide the capacity and flexibility to help the divisions ‘make it happen’ for their customers.