What’s with the wild swings?

“Do we as an industry want to continue to have these wild swings in pricing?” Newman asked.

“Talking to risk managers and CFOs of big business, the pricing volatility that occurs in our sector I think is very difficult for people to budget for, creates a lot of uncertainty in their own business and planning process, and I think it’s something that we should try to move away from. Who do they benefit?”

Newman said that establishing more stable, longer term relationships that were “less affected by external market indicators” was of utmost importance.

“So if we think client X is a core client for Catlin over the long term, and we think that fundamentally their risk management is sound, this is an appropriate partner for us,” he said.

“They know that we’ll be there for them in the tougher times and we know that they’ll be there for us with an element of payback if the losses turn out to be far worse than predicted.”

Newman said that this was a more desirable situation than having hard and soft volatility that is very difficult for carriers, brokers and risk professionals to budget for.

“I think that’s a better longer term objective than trying to guess whether the hard market is ever going to come back, what will it look like, and what will cause it,” he said.

“And, on that point, until we have multiple large natural catastrophe events in Asia, I can’t predict that it’s [the hard market] going to come back.

“We got close in 2011/12 to a really significant hard market, but new capital came into the market at the right time from the risk buyers’ perspective, and at the wrong time from the carriers’ perspective. It stopped that market trend.

“It’s not until you have capital leaving the industry that pricing will fundamentally change.”