Reinsurers that have moved their operations to Zurich in recent years will struggle to gain the same traction in the European market companies that established operations there many years ago did.
That is the view of Stephan Knipper, chief executive of AXIS Re Europe. The business this year celebrated its ten year anniversary of having an operation in Zurich and now has 100 people based in the office.
Knipper says other companies now are trying to follow AXIS Re Europe’s example. A shortage of capacity at the time meant the company gained traction in the European market quickly.
“The timing was good – we opened the door and the business literally started coming in,” said Knipper. “We were also committed and offered a broad product offering from the start. But we ended up writing close to €200 million in premium volume in the first 12 months – and that was while also remaining selective on risks.”
He said the companies moving to Zurich more recently are increasing competition for talent in the market and costs are starting to increase as a result. But given the challenge they will have building a book of business, he believes some will struggle with this dynamic.
“Where you see individuals moving for a salary hike of anything up to 50 percent, we do wonder how they can afford that and where the business to pay for it is going to come from,” Knipper said. “New capital was needed in the market in 2003; the situation is very different now. There is overcapacity in the market and things are very competitive.”
He said Zurich as a hub is now one of the most established providers of capacity to the market in Europe now. AXIS Re Europe’s Zurich branch operation now has the full spectrum of expertise ranging from underwriters to analytics to claims functions to IT. Its European headquarters are in Dublin, giving it the advantage of operating from within the Eurozone when writing business and an advantage when it comes to regulatory requirements.
He says the new competition does not bother AXIS Re Europe – its very established team and market presence protect it to a certain extent. But he adds that his main focus at the moment is working closely with clients to understand their needs and form deeper relationships.
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