Sergio Ermotti, in a nutshell what is reinsurance and how is it different from what we all know,
which is insurance?
Well, in a nutshell a reinsurer is insuring the insurance companies. So we are a B2B
business. What we do typically is we take excess risk that insurance companies don’t want
to take on their own. We provide relief to their balance sheet and make it easier for them to
serve their clients. The best example is probably the last one we faced—a meaningful
one—the Covid pandemic, where our industry suffered billions of losses, and those billions
of losses were a relief to our clients, the insurance companies. And by doing that we made
them comfortable with the ability to navigate a very challenging environment and being able
to give competitive pricing to their clients. So our role is really not only to provide capital in
very difficult times but also through risk-transfer solutions, we are providing a better way to
manage the risks for our clients.
In the introduction, I mentioned that Switzerland is a hub for reinsurers. Why is that?
For reinsurance companies, Switzerland is the third largest player after the U.S. and
Germany. Typically, we enjoy all the benefits of Switzerland: a stable political system, a very
good infrastructure, very strong and credible regulation. In addition to that, we have a very
liberal labor market that allows us to attract and retain talent, experts that are very key in our
industry. And I would say we have excellent universities. We have access to new talent, in
particular in the areas of IT, digitalization, engineering, mathematics, and actuarial works. So
I think it’s a very good place. Last but not least, we are also in the center of Europe with very
good infrastructure: It’s very easy to come to Switzerland and to fly out of Switzerland in a
convenient way. So it’s a reflection of the rest of the country's strengths.
And what are some of the challenges that the reinsurance industry is currently
The typical challenges are not much different from what many other sectors are facing
nowadays. I would say first of all, we are still confronted with the aftermath of the pandemic,
so the second-order effects of the pandemic are still to be fully understood. I would say that
inflation is also a big issue, and of course in everything which is a non-life portfolio we are
going to face most likely an excess to the inflation assumptions that we have in our models,
at least for the short-term, and the fact that all claims will be inflated by these developments.
And I think that clearly the outcome of the crisis coming from Ukraine and Russia will play
out in the economy. If the economy is not growing, less people probably will need insurance
coverage and in turn, insurers will probably need less reinsurance services. So in a nutshell,
you can see they are all related to what we see in the news everyday.
So those are a few of the challenges. Let’s talk about opportunities. Where do you see
The world has become even riskier than we thought only a few years ago and in that sense I
do see the need for many people to take on insurance. People are more risk-aware at an
individual level but also companies. And as we see in the next 10, 20 years GDP will
continue to grow. We are quite positive that once we get out of this phase, GDP will continue
to grow at 4–5 percent a year. Therefore, you will see the insurance sector benefiting from
that. In addition, the fact that we are able more and more to use data and to analyze risks, to
be much more focused on the way we take risk and we price risk will allow us to enter into
new frontiers in respect of how we manage our business. Digital is also helping. A lot of
people who have no access to insurance—people that typically are coming out of poverty
going into the so-called middle class—they have some things to lose, and they are more
likely to take on insurance. Therefore, I see the macro trend supporting our industry being