A singular perspective

24-10-2018

A singular perspective

Founded in 1993, PartnerRe has seen great change in the reinsurance landscape—and has itself evolved along the way. Now that the company is privately owned by Italian investment fund EXOR, CEO Emmanuel Clarke describes to Bermuda:Re+ILS the new journey PartnerRe has embarked on—and why this sets it apart from the pack.

This year marks the 25th anniversary of the creation of PartnerRe, and also heralded the first PartnerRe press conference at the Monte Carlo Rendez-Vous since 2015, held then in the wake of the company’s purchase by Italian company EXOR.

“Our press conference in 2015 was very specific to our acquisition by EXOR, so this year is our first press conference in Monte Carlo to talk about the business,” Emmanuel Clarke, chief executive officer of PartnerRe, explains.

There is much to explain. Clarke believes that PartnerRe is distinctly different from other reinsurers—and the differences exist because of its ownership. For some time, PartnerRe has stressed the benefits of no longer being listed, and the fact that it does not dabble in insurance. This means it has no potential conflicts with clients, but these messages need now to be expressed to the market.

“We felt that with our unique business model, and the fact that we are also a globally diversified reinsurer, we could contribute to the debate and add our own perspective to Monte Carlo,” he says.

“We’re privately owned and we’re a pure reinsurer; that gives us an edge and a unique position in the market.”

25 years young

As well as marking the quarter century of PartnerRe’s existence, this year was also the 21st anniversary of Clarke’s joining the company. A lot has changed since then—and he explains the ride he has been on.

“I joined PartnerRe in 1997 from SAFR, which was PartnerRe’s first acquisition,” he says. “At that time, PartnerRe was a monoline cat reinsurance company, but by 1997 the company had already begun to diversify away from property cat.

“When PartnerRe began in 1993, we were a 100 percent cat company in response to the shortage of capital at the time. Today, net cat premiums represent just under 5 percent of our total revenues.”

According to Clarke, PartnerRe has progressed over the years. First, its business is now highly diversified through a number of P&C and specialty classes—in which, Clarke says, the company now has some strong lead positions—and through life and health, adding that this has been a major transformation for the company.

The second change Clarke identifies is more in terms of culture. There was a first phase to the company, when it was a major monoline cat player, and then a second phase during which it built the organisation, but was still very much a product line organisation—it responded to clients on an individual single transaction basis that was very product-centric.

Clarke describes the new PartnerRe as a company that aims to respond to its clients’ needs on a holistic basis, as opposed to individual product lines.

“Those are two of the major changes the company has gone through since it was founded 25 years ago,” he says.

A fast-moving giant

Size can be a hindrance in business. Bigger companies are not always responsive or swift to react to clients’ needs. Clarke acknowledges this—and explains how PartnerRe is different. He argues that it can be both large and nimble.

“This is something that is very important to us. What we hear from our clients is that they can be frustrated at times by the slowness of some of the bigger players, which are not able to respond quickly enough to their demands.

“It’s important for us to grow in relevance, but at the same time we need to retain our nimbleness and agility,” he says.

“How do we achieve this? It’s mostly through two things: culture and organisational structure. Culture is making sure there are no siloes in the organisation. If a client needs a product that combines, for instance, energy and credit, or agriculture and property—and I’m talking about real examples here—we can quickly bring the relevant teams together and work on one solution for the client, without having to delay our response through a turf issue resolution process or committee approval.”

When it comes to structure, Clarke says this is about making sure PartnerRe is lean and effective. The people in front of the clients are the decision-makers: PartnerRe’s clients don’t have to work through several layers of people—they don’t start with a client adviser and then move on to a technical adviser to get a decision.

Clarke points out that if you want a mortgage you go to the bank and talk to the person who can actually provide you with the solution—you don’t want to talk to someone who doesn’t have the authority to grant what you want.

That’s the structure and culture that PartnerRe has built—its underwriters can make decisions very quickly for their clients.

According to Clarke, 18 months ago the company embarked on a development programme for leaders within PartnerRe. This clarified and crystallised the type of leadership the company wants at the senior leadership level, and it will develop and equip the next level of leaders to be more agile in a complex business environment.

It will also reward the right leadership behaviour and make sure it has people with the appropriate mindset in the organisation.

“We have made a number of changes within PartnerRe in the leadership structure over the past couple of years,” Clarke says. “We are appointing and promoting people who we believe are in the best place to deliver the culture we are looking for.”

Cyber calling

Clarke is also in charge of PartnerRe’s cyber segment and he sees clear opportunities in this area for the company. “Cyber is a class of growing concern for many corporations around the world,” he says.

“If you look back over the past five years or so, you’ll recall that chief information officers were standing in front of their boards of directors reassuring them about the cybersecurity of the company, that they had solid firewalls and no-one could break in.

“Today the world is in a different place—we know we’re being hacked in everyday life, we know we’re being attacked, and it’s about how we respond. There cannot be any complacency on this.”

According to Clarke, cyber risk insurance is now a tool to help companies to manage such attacks, and he believes that PartnerRe’s role is to help insurance companies to provide a product that responds to those needs. He says there has been continuous business development in the US, where regulation around data is a lot more stringent, but he says PartnerRe is now seeing a lot more growth
in other parts of the world, especially Europe—and that Asia will be next.

Looking at specific challenges on cyber Clarke thinks there are two: one that PartnerRe is comfortable with and one that it needs to be very disciplined about.

“The one we’re comfortable with is that this is an emerging class, and we don’t have enough data,” he says. “It’s been profitable for the last few years, but that doesn’t mean the level of pricing is adequate for the risk we’re taking. We’ll find out only by taking the risk and then adjusting as we live through future experience.

“The second challenge is the accumulation of risk, because obviously cyber is also a cat product. You can have some attrition, but you can also potentially expose yourself to a systemic event. Unlike cat, where earthquakes or hurricanes happen in one specific region, cyber attacks on the power grid, worldwide internet or major cloud providers would be systemic events that could affect the whole world.

“That’s the main challenge, I believe, of cyber re/insurance—how to frame it so you can contain your aggregate exposure to systemic events.”

PartnerRe, Emmanuel Clarke, perspective, business, cyber, EXOR

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