OLDWICK, N.J.--(BUSINESS WIRE)--In this A.M. BestTV episode, on location from the final day of the Rendez-vous de Septembre (Rendez-vous) reinsurance conference in Monte Carlo, a panel of A.M. Best executives—Chief Rating Officer Stefan Holzberger, Group Vice President John Andre and Vice President Robert DeRose—discuss the factors shaping the environment of reinsurance. Click on http://www.ambest.com/v.asp?v=rvs5915 to view the video program.
“Clearly the number one theme at Rendez-vous was mergers and acquisitions (M&A), and in addition, the growing presence of convergence capital and the role it's playing in the market,” said Holzberger. “Also talked about was how difficult it is for reinsurers to source organic growth. There are very few growth opportunities in the market with the amount of capacity that's available. That's obviously putting a strain on these organizations and their efforts to use the capacity that they have available to them. Perhaps what's most surprising with the M&A deals that A.M. Best sees is the valuations that are being paid. No longer are these M&A transactions an impaired company, looking desperately for a white knight to ride in and save them before they go down the path toward insolvency. These are healthy, vibrant companies, so from a rating agency perspective, it is a bit of a concern.”
“A year ago, at Rendez-vous, everyone was talking about the threat that convergence capital presents to the market. This year, there seems to be a little bit of a different view. People are talking about it more opportunistically,” said DeRose. “Looking at the year past, definitely reinsurers were looking to try to find ways to embrace the alternative capital, as with the formation of new sidecars. Some sidecars have increased their capitalization, and now, reinsurers are trying to find ways to harness that capital and reduce their cost of capital, as well as provide additional capacity to their clients.”
“A.M. Best is very active in Bermuda with ratings of long-established companies, 30-year-old companies, as well as young companies. The viability of that market certainly is something A.M. Best always follows and keeps an eye on,” stated Andre. “Bermuda still remains a vibrant part of, not only the United States and the West, but they're expanding their presence like a number of the more established European companies, and with any market, the hubs have spread around the world. A.M. Best is rating probably 40 different domiciles of reinsurers, if not a little more. How they deal in those local markets with regulations getting tighter and tighter in these places is important and something A.M. Best acknowledges and follows as part of its rating analysis. However, A.M. Best is pleased to see how Bermuda has dealt with many of these factors over the past years.”
Full-length interviews are available. Go to http://www.ambest.com/montecarlo to see all of the more than 25 interviews with chief executive officers and other executives.
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