Konrad Rentrup founded Hannover Re Bermuda and carefully steered the operation for just short of 20 years. Following his retirement in July, he reflects on his proudest achievements during almost two decades at the helm—and the greatest challenges he faced. Bermuda:Re+ILS reports.
“I never planned to be here for 20 years. The plan, which I agreed with my wife, was to be here for three years. But the quality of life in Bermuda is excellent, it is the home of our three children and we are still here. It also made sense for the company and its operation to stay longer than just the initially planned period—and the rest is history,” says Konrad Rentrup, who retired as CEO of Hannover Re Bermuda in July.
Rentrup reflects that when he arrived in Bermuda with his wife and three children in 2001, he could not have envisaged what he would go on to build, how Bermuda would become the long-term home for his family—and some of the challenges he would face and overcome in the next two decades.
The reinsurance industry does tend to hold on to good people—and he has a track record that would be the envy of reinsurance chief executives the world over.
“Pricing may still fluctuate with hard and soft cycles but there will also be a much greater emphasis on using data and technology.”
The company Rentrup built from scratch did not make a loss in the 19 years he ran it—even through years that included large loss events such as Hurricane Katrina, but it started with relatively humble roots.
Rentrup recalls that when Hannover Re gave the green light for the operation in Bermuda it was a company first in many ways. Hannover Re had not previously set up significant subsidiaries outside Germany—never mind give away underwriting authority.
Bermuda’s reputation and importance in the world of big risk transfer and reinsurance were growing and the firm understood it needed a presence on the Island. It turned to Rentrup, fresh from a stint heading its Los Angeles operations, to turn that goal into a reality.
He was asked to write a paper on the pros and cons of the German reinsurer’s forming a unit on Bermuda. That led the Hannover Re executive board to make the strategic decision to form the company in 2001. It received its licence as a class 4 reinsurer in Bermuda in April 2001.
“That was an important landmark and a real first in the development of the company,” Rentrup says.
A global centre
Hannover Re had always been an active player on the cat side but it had no presence in the US. Bermuda was the natural place to form an operation—many of the US clients use this market, and most of Hannover Re’s global property-cat business is now written there.
In 2001 the plan took shape and the Bermuda operation started writing business. As a strategic important subsidiary of Hannover Re, it carries the same ratings as the group: an A+ from AM Best and AA- from Standard & Poor’s.
The fledging unit was given €250 million startup capital and Rentrup was charged with securing regulatory approval, building a team and starting to put the capital to use. It found a receptive regulator and clients open to working with the company.
The company made a solid start to life. Then the terrorist attacks of September 11, 2001, happened—and the reinsurance landscape changed overnight. Suddenly, reinsurance capacity was scarce, and a hard market developed across all lines of business globally.
In response, investors and new money flooded into the market—the majority invested in startups in Bermuda.
“Suddenly, our €250 million did not look like much,” Rentrup explains. “But our parent stepped in and gave us more capital to work with.”
In response, the parent injected a further €800 million ($953 million) into the business. This allowed the company to grow and become one of the largest property catastrophe companies in the market that has emerged as a global hub for catastrophe reinsurance.
Rentrup stresses that the company’s ethos is one that is committed to a technical underwriting approach. Modelling forms an essential part of its exposure analysis and is used alongside the traditional approach to underwrite clients’ catastrophe risks.
Hannover Re Bermuda wrote only €50 million of business in its first year but Bermuda was soon in demand in the year-end renewals as brokers looked to place reinsurance programmes in a hard market with capacity scarce in many lines.
“No very large reinsurance programmes could be placed without the involvement of Bermuda reinsurers,” Rentrup recalls.
“There was an initial focus on cat and US business but that quickly started to diversify to take in business from Japan, Australia, Europe and the UK, and other lines of business too,” he says.
Over the years Hannover Re Bermuda has become a well-known market for workers’ compensation cat and personal accident cat business, lines of terrorism protection, marine, aviation retro and credit/surety. Its UK motor book has seen some growth, and its cyber book is also growing.
The business steadily grew and built a footprint and reputation in Bermuda, while also developing a talented team.
The next major challenge came in 2005 with Hurricane Katrina, but even in that challenging year of large claims and losses for many reinsurers, Hannover Re Bermuda made money.
“I am very proud of the fact that, as a company, we have developed from a small team to having 30 talented people on the Island.
“We have developed a book of business that has grown from €50 million in the first year to just short of €1 billion now. We have not shown a loss in any of those years—we have always delivered a positive result, always paid a dividend,” Rentrup says.
Some of the biggest challenges he has faced have been around building a team with the right people, and managing the relationship with Hannover Re. Though a separate company, Hannover Re Bermuda sees Hannover Re very much as its parent and is, in part, guided by its strategic goals.
“Having that close relationship and ensuring it is positive has been very important for us,” he says.
After 20 years at the helm, Rentrup now has time to reflect on the industry—how it has changed and how it might develop further in the future.
Probably the most significant change he has seen is around the sources of capital that underpin the industry. For hundreds of years this had been fairly traditional equity capital—and the reinsurance industry was regarded as separate to, and protected from, the often more volatile capital markets.
This has rapidly changed—in the aftermath of large events such as 9/11 and due to the growth of insurance-linked securities (ILS) as an asset class.
“That has been an important change since it means that capital can more easily flow in and out of the industry. It has changed the fundamental dynamics of the industry,” he says.
Hannover Re leverages ILS in a number of ways, including via its third party retrocession K-Cessions sidecar. Hannover Re Bermuda feeds business to this vehicle as do other parts of the group. It is something that Rentrup believes is here to stay—and which will increasingly complement other developments in the industry including digitisation and data-led decision-making, trends that will lead to a smaller number of global players dominating.
“There will be more digitisation and flexible access to capital as well as a global footprint. Clients will want companies able to work with them on a global basis across all lines of business,” Rentrup says.
“Pricing may still fluctuate with hard and soft cycles but there will also be a much greater emphasis on using data and technology to justify the price—using analytics and models to justify decisions to cedants. That skillset will become the reserve of the biggest players.”
He believes Bermuda can continue to thrive. Alongside the development of reinsurers, he believes, they will become more flexible and discerning about which domicile to use. Bermuda, with its flexible regulatory regime, ticks a lot of boxes.
“In the future, companies will look closely at territories with friendly and well-developed regulatory regimes,” he says. “Bermuda has many advantages around costs and its location, with Europe and the US being within manageable time zones.”
Rentrup has handed the leadership of Hannover Re Bermuda to Chantal Cardinez, who has moved over from running Hannover Life Reinsurance Bermuda. She joined Hannover Re in 2008 as the chief business development officer of Hannover Life Reassurance Bermuda and was promoted to chief executive officer of that business in 2015.
While many experienced executives almost immediately take on non-executive roles or get involved in new ventures after retirement, Rentrup is looking forward to taking some genuine time out. He says he is certainty not interested in going back to an office.
“I am a family-orientated guy and for at least six months, I plan to enjoy that,” he says.
“I still have family in Germany and we can now visit more but I don’t think we would move back. That said, I am also flexible. If interesting opportunities come along, I will look at them. And I plan to improve on the piano!”
Konrad Rentrup, Hannover Re