Guy Carpenter’s Tony Gallagher Discusses Structured Solutions in Asia Pacific

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In an interview with Intelligent Insurer, Tony Gallagher, CEO, Asia Pacific, describes how the reinsurance market is moving away from aggregate covers and lower layers, indicating that reinsurance buyers will be looking for earnings protection or ways of smoothing losses from their reinsurers, perhaps using different structures.

“Earnings and capital protection is something that they will need to talk about, because there is a change in the deductible levels that moves some form of volatility to the insurance company’s balance sheet,” Tony continues. “There will be a lot of conversations around what we call structured products that could provide some smoothing for results across a period of 2 or 3 years.”

Capital coming back into the market has eased capacity concerns, Tony explains.

“Investors are seeing reinsurance delivering double-digit returns again,” he said.

Regarding coming challenges, Tony says the industry needs to adapt to the changing nature of risk, such as battery storage or the shift to electric vehicles.

“Systemic risk is different from 5 or 10 years ago,” he continues. “The industry needs to have a look at property risks, how they are managed. “The industry also needs to step up and really support renewable energy.”