Due to its date in the insurance calender, the Monte Carlo Rendez-vous is less a site for renewals; more a place for the insurance fraternity to discuss strategies. To these ends it is incredibly successful, says Ralph Savage
According to the official conference programme, this year's Monte Carlo Rendezvous will be spent discussing the issue of compensation: can the problem be contained or is there even a problem at all? The event's broader itinerary will see brokers, insurers, buyers, cedents, and reinsurers discussing a much wider range of topics over a couple of glasses of Sancerre.
Marie-Louise Rossi, chief executive of the International Underwriting Association, is an annual visitor and believes the opportunity to rub shoulders with the industry's most influential decision-makers is well worth the time and money. "It's a very useful way of meeting people from the management boards of European companies, both reinsurers and brokers. Despite the fact it can be EUR20 (£13.60) for a glass of wine, it turns out to be good value for money."
On a more serious note, Ms Rossi believes the air of optimism which surrounded last year's event will continue, but she will personally be concentrating on a singular if over-arching issue: "My focus will be on the regulatory dimension, by which I mean the facilitation of free trade and doing what I can to make it easier to trade reinsurance across borders."
Ms Rossi explains that the European Reinsurance Directive, which is currently working its way through the European Union Parliament and the Council of Ministers, has been taking up the largest part of her time from a lobbying perspective. "A draft has been published under the Irish presidency with a proposal for legislation - and the next presidency has promised to take it on. I expect it will go through in 2005, but the market has a lot of work to do before then."
Historically, the Monte Carlo event has offered a chance for brokers and reinsurers to discuss renewal terms for the coming calendar year.
But, according to Callum Stewart, managing director of broker Heath Lambert's reinsurance division, October's conference in Baden Baden has become the more pivotal in recent times. "Monte Carlo is a bit early for renewals itself," he says. "About 20 years ago a lot more was done there in a far more gentlemanly fashion, but that's long gone. The renewals will be agreed in Baden Baden, where as Monte Carlo is more about people getting their strategies clear and discussing rates."
Rates and the general market environment will occupy the minds of the majority of attendees this year. And Mr Stewart believes market sentiment will be markedly different depending on whom you speak to: "The market would say times are good as reinsurers are coming off historically high rates. Nearly all lines are dropping - property catastrophe the most - but that's because there are more mouths to feed. Typically it seems that the brokers are predicting rates to go down much faster than underwriters."
Despite Monte Carlo having been usurped as the event for agreeing renewals, reinsurers and their senior management are very much in the shop window, particularly with interim results fresh in the minds of buyers. "Another significant topic under discussion will be security upgrades and downgrades," adds Mr Stewart. "Cedents want to make sure that if they buy, it's with people who are still around to pay up."
With this is mind, recent news surrounding the financial strength of Lloyd's appears to have buoyed the market, as well as the separate ratings upgrades or affirmations of 15 syndicates by AM Best (PM, 19 August p6).
"The Lloyd's upgrade was well received and has been a big boost to the industry," says Mr Stewart. "It's the first upgrade of any reinsurance business for a long time."
While not enjoying the same boost from ratings agencies as Lloyd's, the status of the two biggest global players - Munich Re and Swiss Re - is of key importance to the entire industry. Swiss Re last week reported SFr 1.4bn (£619m) profits for the first half of 2004 but relatively benign claims may have made it easier. "The view about Swiss Re and Munich Re is that they've had problems and they are turning around," comments Mr Stewart. "Swiss Re's figures were positive as it had a good 2003 and there's going to be nothing wrong with 2004."
Bermuda's emergence as a global force in reinsurance has seen some sizeable firms grow into giants inside a decade. If financial security is indeed a top priority for reinsurance buyers, Mr Stewart's conclusion is that shorter-tailed players could start to win many more admirers. "One thing that will be interesting from a security point of view, is whether the older reinsurers are deemed to be as strong as the newer ones, particularly in Bermuda. If you look at a firm like Axis Re, which started life in 2000, it has capitalised to the tune of $2.8bn (£1.6bn). This is greater than Partner Re and some of its counterparts, which have much longer histories."
Just to taint this otherwise optimistic picture, at the time of going to press, Converium, a top 10 reinsurer suffered a double downgrade from both Standard and Poor's and AM Best. Also, the hurricane season got into full swing, first with Hurricane Charley and now Frances.
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