Cloutier: Reinsurers need to shift perception as “merchants of fear” ahead of 1.1

Aspen’s Mark Cloutier has urged the reinsurance sector not to waste the opportunity of the upcoming industry congress in Monte Carlo on “those same damn conversations”, instead calling for greater efforts around culture and innovation.

Speaking at The Insurer’s Pre-Monte Carlo Forum in London, the Aspen executive chairman and group CEO heralded previous strides in innovation across the (re)insurance market that are now considered standard practice.

For instance, Aspen’s innovation efforts have included the deployment of third-party capital into its portfolio across insurance and reinsurance lines.

Cloutier drew comparisons between the turnaround of Aspen and the challenges facing the wider sector today. As part of its remediation efforts, the carrier cut back on nat cat and withdrew from writing aviation, space and bloodstock risks on the reinsurance side.

However, Cloutier pointed out that Aspen’s transformation journey has effectively completed, with a focus going forward on fostering a healthy business and culture.

“What do we have in our businesses? We have a bag of money and a bag of tools,” he told attendees at the event on Wednesday.

“A bag of money is just as stupid as a bag of hammers. They can both sit there, nothing can happen with them until some smart people take a look at that money and start to think about what they can do with that money and deploy the tools to get that capital properly deployed, successfully and profitably, into the sector.”

Cloutier argued that transforming corporate culture begins with creating an environment to embrace what a business does well, such as trading relationships – with the executive noting that 89 percent of relationships within Aspen’s reinsurance portfolio span 10+ years – as well as changing what is not perceived to be good business.

“As a sector, we know our standing in the world is not great. Notwithstanding all that we do and all that we enable, we feel underappreciated. We need to be thoughtful about the messaging and the way it gets conducted at times,” he said.

“I think that we, as a sector, need to grow a culture that can articulate the benefits of what we bring to the economic viability of the world and whole communities, on whose behalf we're doing that for.”

On the latter point, Cloutier nodded to Aspen’s prospectus filing last year with the Securities and Exchange Commission for a New York listing, underlining the importance of understanding that a large chunk of private equity funds originate from retirement plans and mutual funds.

“It's no secret that we did wander around a little bit and interrogate investor appetite for a company like Aspen in the public markets,” he said.

“The vast majority of fund managers and portfolio managers’ money comes from people’s investments. The very people who, on the other side of their balance sheet, we’re providing resiliency. So we need to shift the notion that we're merchants of fear making a profit off of bad things that have happened in the world.”

Cloutier said that in light of the AI, data and insights available today, the sector has “no excuses” not to refine the right cultural attributes and pick up its tools.

“As we go into Monte Carlo, brokers are talking the market down, carriers are talking the market up about social inflation in casualty and secondary perils in property,” he said.

“If we go into Monte Carlo, we face off and we have those same damn conversations one more year while we're all sitting on huge bags of money, and we don't use this collaborative power that we have as a sector, there's a significant waste of opportunity and we'll just continue this endless cycle.”