PartnerRe CEO Emmanuel Clarke says his reinsurer is reaping the rewards of being a rare “pureplay” reinsurer in a market that has seen almost all of its rivals develop significant primary operations.
In an interview with Re-Insurance, Clarke also fiercely scotched suggestions of talks with Scor that prompted its French rival to issue a staunch denial last week. “We have not entertained any conversations with Scor in the M&A field,” he explained.
And while the M&A carousel remains in full swing – last month alone ILS heavyweight Nephila, Bermudian Aspen and US specialty insurer Navigators all sold – Clarke said PartnerRe has “no interest in a transformational M&A”.
“We do not need and are not interested in any large-scale acquisition,” he said. “We’re already in that relevant reinsurance playground; we don’t need that kind of transformational acquisition.”
However, the executive said the Bermuda-headquartered reinsurer remains open to any bolt on acquisition opportunities that may be attractive; either financially or strategically.
“When the phone rings we will answer it,” Clarke added. “We’re in a good position to add bolt on businesses that are not distracting and contribute to us. It could be on regional basis, a product basis, or in the life and health space where we are underweight in comparison to our peers.” PartnerRe is pursuing a strategy to grow its life and health business and expand its life reinsurance footprint in North America.
The CEO said the reinsurer is keen to strike deals similar to last year’s acquisition of midsize Canadian life reinsurer Aurigen Capital or potential InsurTech deals such as PartnerRe’s deal with agricultural data analytics firm Farmers Edge.
Clarke also acknowledged that demand for reinsurance is growing and that the firm is able to capitalise on this because of its strategic decision to not compete with its customers in the primary space.
“We like to build a degree of intimacy with our clients and this might mean discussing M&A or new product lines,” he said.
“Clients respond positively because they know they are not sharing this information with a potential competitor.”
Yesterday, Re-Insurance published research that showed first half reinsurance premiums were $144bn, including P&C and life, up 15 percent from $127bn.
And this was largely mirrored by PartnerRe which saw non-life premiums climb by 13 percent to $1.25bn in the second quarter.
Clarke noted that clients are increasingly seeing reinsurance as more than just a capital management tool.
“Increasingly, buyers are seeing reinsurance also as an earnings volatility tool,” he explained. He added that cedents are increasingly looking to restructure their programs, buying more composite-style cover to provide broader coverage than just, say, a nat cat tower.
“Our clients want to work with reinsurance partners that have a vested interest in helping them to grow and develop their own businesses, support their most confidential initiatives and that can provide capacity after large or unexpected events,” he said.
“PartnerRe’s business model as a pure-play, privately-owned reinsurer perfectly positions us for that role.”
“In 2017 we outperformed the entire industry which gives us great confidence we can perform as an investment. Our COR was just over 100 percent following the worst nat cats on record – that was an outstanding performance.”
“There is absolutely no plan to change the ownership model of Partner Re.”