WTW’s annual non-payment insurance roundtable gathered a group of industry-leading bankers and underwriters in early October to discuss the continued evolution of the product, credit and client selection, as well as market developments around debt sustainability, ESG and the shift towards standardised policy wordings.


Roundtable participants:

  • Matthieu le Bret, managing director, head of distribution, Europe and Asia Pacific, NordLB
  • Gary Lowe, managing director, global head of credit insurance, Standard Chartered
  • Mimi Rumpeltin, senior underwriter, credit and political risk, Everest Insurance
  • Jeremy Shallow, deputy active underwriter, Argo Global
  • Andrew van den Born, managing director, global head of CPRI for financial institutions, WTW (chair)
  • Deborah Wyatt, head of credit and political risks, Chaucer Group


van den Born: This is the second year in a row that we’ve been able to host this discussion in person since the pandemic. This time last year, there was a sense that we were finally emerging from global economic difficulties and returning to some degree of normality. However, the fallout from Russia’s invasion of Ukraine, along with the ensuing sanctions regimes, the energy and food crises, the never-ending supply chain shocks and rising inflation, have quickly brought us all to heel.

What does the current economic backdrop mean for you in terms of lender appetite? During the pandemic, there was an inevitable flight to quality. Are we likely to see this trend continue?

Lowe: There has been significant reduction in credit market activities in general this year.

Syndicated loan markets are down, bond markets are down even further in terms of issuance – particularly in our footprint in the emerging markets space – but the overall bucket has shrunk this year. We’ve had a series of rate rises recently, which have frozen up a lot of the lending markets. Leveraged finance markets are basically shut as people think about what to do and how to react to these developments.

We’ve got used to seeing a situation over the last 10 years where, regardless of the shock, the money taps keep flowing. But that has changed and we’re in a period of readjustment, repricing and reassessment of credit risk.

At the same time, yes, we’re open for the right clients who have the right fundamentals to see their way through all of those challenges. But there’s no doubt that credit selection and client selection has become even more critically important.

le Bret: When there is more inflation, there’s usually a shortcoming in interest rates, which creates FX volatility. For a euro-funding bank like us, with cross-currency swaps, that creates an increase in the cost of funds. When there’s volatility the liquid markets tend to reprice before the illiquid ones, and so we see bond spreads widen before loan spreads. Even for quality issuers, such as banks, credit spreads have widened quite significantly. At the same time, the loan market hasn’t adjusted yet – although we expect this to change with significant repricing in the coming months.

For the time being, we have refocused towards shorter-term maturities – five or seven-year tenors compared with 15 to 20 years previously. Slightly riskier projects can still suffer some repricing because for borrowers that add a swap on top of their floating rate loans, the overall cost of financing projects increases and as a result, the profitability of the equity holders drops. So there is a bit more risk, shorter tenors – and still with the same project sponsors. What we believe is that the other projects, the ones that would have typically gone to market one or two years ago with very tight spreads, are going to reprice.

van den Born: In terms of the ability to reprice or refinance, is that available in the current market?

le Bret: It’s certainly a case of wait and see. Discussions regarding refis have been delayed by the market turmoil. Project sponsors are likely hoping for the markets to normalise and tighten. Banks, on the other hand, anticipate that the margins will finally reflect our cost of funds better.


van den Born: What is the appetite amongst insurers to support the banks in the current environment? Are insurers being more conservative and applying stricter underwriting criteria as a consequence of this volatility?

Wyatt: The evolution in underwriting discipline has helped quite a bit. That’s been ongoing for probably the last 10 years and has driven a tightening in appetite. The flight to quality has been as much with the underwriters as the banks.

I think the fear of the pandemic, rather than the actual outcome, pushed a lot of players to completely rebalance their books and say, ‘we’re not going to do this anymore’. So we’ve got ourselves in a good position – decisions have already been made. Now, when things are tightening, underwriters are in a better position because we’ve already tidied up the books and better communicated our appetite.


van den Born: Are you saying we won’t see even stricter guidelines, given the fact that the market arguably overreacted, and we haven’t seen the tsunami of claims that people were predicting off the back of the pandemic?

Wyatt: We’re already in that position. The shift that happened was away from credit and towards more political risk. We’ll likely see a change in where the appetite is within those markets. For example, the build-up of all the African sovereign debt – that’s probably going to calm down because everybody’s watching and waiting to see what’s going to happen.

Shallow: As underwriters, we’ve become used to a constant onslaught of crises in various forms. We don’t know what shape they’re going to take but we try and position our books so that when something does happen, we are resilient enough to be able to cope.

Once you know what you’re facing, you can adapt. Through Covid, things like travel and hospitality were clearly the sectors that were most impacted, and appetite was reduced. We’re seeing a similar thing in the current situation with the energy crisis.


van den Born: Gary touched on the topic of pricing. During the pandemic, we didn’t really witness any market correction. We’ve all been told there’s plenty of liquidity in the market, although arguably that liquidity has all been directed at the same investment grade-rated assets, resulting in margin compression and oversubscription. Are we now starting to see pressures on pricing?

Lowe: You need to differentiate between the components of rates: base rate which is simply the cost of money, and credit spread, which is the risk premium.

The real risks today, including political risks, are in the sovereign credit space, where a lot of countries are significantly indebted and may well be facing a debt crisis. Others are facing a pretty poor combination of natural catastrophes, supply chain disruption and impacts of inflation – and there’s a war going on. If there’s sudden pressure on credit risk, compounded by the fact that the cost of debt service for a lot of these companies and/or countries is rising, then something is going to give and we probably will see some stressed credit exposures.

At the same time, it’s definitely not all doom and gloom – there’s a real economy out there, which is thundering ahead. That’s why inflation is so high – because of demand. Therefore, countries and companies that are well-positioned to respond to those opportunities are still going to be those that we want to bank. The really interesting thing is where that liquidity ends up. Because it’s still there, the money was printed, and the assets were purchased. It’s a question of where it’s going to be deployed.

Wyatt: You’re saying that client selection is becoming increasingly important for banks – even more so on our side. It’s our favourite phrase at the moment, ‘narrower and deeper’, we want to do more with a smaller number of top-tier clients – and it’s probably people who have been through crises and have experience in recovery and in managing difficult situations. It’s going to be difficult for new entrants.

Rumpeltin: We are all looking at a vast universe of risks and we are considering them for a small universe of clients we know and whose track record we understand. I wouldn’t say we’re retracting in terms of the suite of products and/or risks that we look at, but we are reining in the number of clients that we support.


van den Born: In terms of asset classes, what’s been encouraging throughout the pandemic is the willingness of some markets to entertain some of the less vanilla type of trades. There is increasing appetite in the market to cover the likes of margin loans, swaps, repacks, fund finance, and even more recently we’ve had interest in NAV facilities, which I appreciate can be quite challenging. But the fact that the market is willing to look at these has been encouraging.

A question for the banks: what would you like to see the market do more of in terms of the continued development of the product? Because despite the crisis we can’t afford to sit still. The product offering needs to continue to evolve and hopefully cover an increasing number of asset classes.

le Bret: There is a silver lining in the current situation. We are a bank heavily focused on environmental, social and governance (ESG) and renewables finance, and at the moment, everybody knows the energy prices are extremely high. Generally speaking, this asset class performs very well in times of crisis, because commodities and energy prices tend to be high when there’s uncertainty. So we see more appetite in the insurance market towards renewables deals, including deals backed by merchant cash flows, since the distance to break even in those projects is at the moment very wide and is expected to stay that way for some time. This is a good trend and these assets make strong sense in a portfolio. I’m not saying everybody should allocate 75-80% of their exposure to just renewables. But the share is clearly growing. We see it because we go to market with numerous renewables deals and we find increasing appetite.

Lowe: One of the great things over the last six to eight years has been the extent to which the market has embraced more of what banks do, for example with swaps and repos and some of the more PRI-style transactions that we’ve done around cash trapped in subsidiaries and so forth.

But then there are still parts of what banks do in credit that we can show to the insurance markets if they want to see it. My fear is always the further we get away from traditional trade lending the more difficult it gets.

We did our first transaction where we insured a NAV credit fund, but banks also do back leveraging of loans for sponsors without recourse, which can sound a little bit complicated, but actually, if you think about it a different way, it’s a lower LTV, excess of loss or second loss risk profile for an underlying asset with significant collateral. Sometimes it’s about explaining what that risk is. Fundamentally from a risk perspective, the bank is taking them for the same reason that it extends a commercial loan to a borrower: because it’s good risk at the right price, well-collateralised, with a good relationship.

There are certainly more opportunities – let’s put it that way. Whenever insurers say they’re full in a particular country or a particular name, well, we’ve got plenty of other options that might be appealing to them.

Rumpeltin: Has the reception been relatively positive in some of those alternative instruments? Or do you think it’s just a few pockets of interest?

Lowe: It starts with one or two embracing new ideas. And then what was once a frontier proposal at one time suddenly becomes something that everybody does. We were the first bank to place the subscription financing capital calls into the market a few years ago. At the time we had to explain that to the market and now it’s well understood, and a lot of people do it. I’m sensitive to the fact that an insurer is not a bank, and certainly not a credit fund, and therefore, doesn’t necessarily want to do everything. But if we stripped it back to the fundamentals of creditworthiness, profitability and relationships, there are other things to do there still.

Shallow: In a time of stress there’s always going to be a reaction from insurers, so complexity and leverage are probably not going to be flavours of the month, particularly if there’s a smorgasbord of other, more vanilla opportunities paying well. We have huge remits in terms of what we can do, and a huge breadth of what we do see, but we also have relatively small teams. It’s a question of allocation of resources for risk reward, and it’s trying to boil that down. If I spend a load of time getting my head around this new opportunity, is there a huge pot of gold at the end of the rainbow? Or am I going to be bogged down in vast quantities of documentation?

Lowe: But is there a lot of that, given insurers are narrowing in on key clients and countries?

Shallow: We’re turning down four-fifths of what we see and that’s not necessarily because it’s bad risk. It’s a very luxurious position to be in. Part of that is because we have to think from a long-term only perspective; we don’t trade our way out of this, we’re stuck with it. It’s about finding that balance between pushing the envelope but also not wanting to see claims. We have evolved, but probably not as quickly as everyone would have necessarily liked. But that’s the beauty of the market – it takes out some of those peaks and troughs with different strategies amongst insurers.

Wyatt: We have to take into account that reinsurers play an important part in dictating our appetite. There are sometimes things that we would quite like to do, but there are only so many battles we want to go into with our reinsurers. That’s ongoing and some will be better placed to manage that than others, depending on how much reinsurance they buy and how big their net appetite is.

In terms of product development, particularly on the credit side, we’ve spent a lot of time convincing management that we’ve changed the way we write credit, and we really know what we’re doing. We focus on the areas that we are really experienced in and that we’re good at. But then there are new products, where we don’t have a track record and which we’re not that knowledgeable about. Banks have been doing this for a very long time – and so getting banks to educate us is really important. Gary mentioned the capital call – and it was a hard slog to get insurers on board with that, both to sell it internally and externally to the reinsurers.

Shallow: That is where you benefit from the trailblazers – those first movers who end up benefiting the whole market. To expect the market to switch quickly on a wholesale basis is unrealistic. The market does a good job of moving with the times – though perhaps at a slightly slower pace than some would hope.


van den Born: Let’s move on. Given the continuing strength of the US dollar, what’s your view on debt sustainability and some of the risks being faced in parts of Africa, such as Ghana, for example, which has had to recently go cap in hand to the IMF?

Lowe: There’s no doubt that we’ve seen currency depreciation. We’ve seen indebtedness as a percentage of GDP increase, and we’ve seen the impact of the pandemic and war on energy prices. This has acutely affected a number of countries in Africa, including Ghana, as you mentioned. A lot of these issues are being raised in IMF meetings. It would be churlish not to acknowledge there are risks bubbling through the system – we’ll have to see what happens.

In terms of new issuances, that has decreased. Although we’re there to support clients, I’ve seen a particular focus on loan bridge to bonds, which is a reaction to disruption to capital markets, but there’s still an expectation that there will be a DCM takeout for those loans once this disruption settles down. And it’s more market volatility, ie a pricing dislocation, than fundamental concerns around credit risks.

The commercial bank market is still there, as is the development bank market. Multilaterals are very much still there, not as a rescue mission, but in a sustainable development way. There’s still infrastructure development, and there’s still a need for roads, ports and energy. Renewable energy is particularly important in Africa, and so is transitional technology. It’s not all about going directly from zero to having the best wind farm on the continent. But there is going to be a need for sustainable clean gas, for example, and for countries that have oil reserves to be able to export them. So there are some nuances around how that journey pans out, particularly in developing markets.


van den Born: Are insurers looking to pull back on African sovereigns?

Shallow: Our perspective on the ‘B’ rated sovereign risks for the last two or three years is that we don’t feel the rates have been sustainable enough for us to make a return at the end of the cycle. With the relatively long tenors you’re putting out, if you decide a sovereign is coming to the brink, a Ghana or a Sri Lanka, you need to switch off five to 10 years before it gets there to not get caught. That’s a long time, particularly if you have existing historical exposures.

We take a bit more of a contrarian view compared to the rest of the insurance market where we look at the contract frustration, the CF risk code, which has been material for 15- to 20 years – that’s been a relatively benign period for sovereigns. We haven’t had that crunch.

So we’re taking more of a bearish stance. That’s not to say we’re doing no sovereigns, but the lower down you are on the spectrum, the more you require multilateral involvement. That’s where we’ll make more exceptions. But the view that a single ‘B’ rated sovereign for 10 years at a price of 2.5% per annum is adequate – we don’t subscribe to that.

Wyatt: The involvement of the multilateral with preferred creditor status is absolutely crucial now. It’s all about the insured and/or reinsured at the end of the day. Yes, the record of losses and good recoveries in the CF market over 20 years has been relatively benign but when things have gone wrong and where there’s been a multilateral or a preferred creditor status of some sort, then the results speak for themselves.


van den Born: Let’s pick up the discussion on renewables and ESG. Given the current energy crisis, can we afford to be green? There is a huge amount of appetite for renewable business, be it wind or solar, and it’s an asset class that has been heavily supported by insurers, who have been happy to go out 18-plus years. But to what extent, given the energy crisis, will the market be in a position to continue to support oil and gas, which still makes up a majority of the book? Or are some insurers looking to reduce their energy exposure going forward?

Rumpeltin: Irrespective of geography and sector, even in the ESG space, we’re all about risk selection. We’re still looking selectively at oil and gas in support of the energy transition and choosing best in class where we can. We’re probably a bit less sensitive in terms of price for the right risk – we can probably compromise on price a bit, but it still has to be the right risk. Right now purely from a credit perspective, it has to be a national champion with very high assurance of government support if and when needed.

Wyatt: A lot of it is about energy transition. So whilst we’re not doing new coal deals, with oil and gas it’s about the transition because some of these economies will not be able to turn everything green overnight.

We’ve developed a scorecard with Moody’s so that every counterparty we deal with, brokers and clients included, will be provided with an ESG score. So whilst the aim is for us to get to net zero, we also want to help inform clients about their score, and how we might be able, in the future, to provide better capacity or differential pricing if they were to have a better score.

Our class of business is different, and we have obligors and borrowers that nobody else does – many of which are not easy to score because they’re niche, often project-type business. The next stage will be to apply the scorecard to those obligors and to our pricing modelling.

Some people are further down the path than others. Certainly compared to the banks, many of which have made good progress with their ESG scoring and associated margin ratchets, insurers are a bit of way behind – but it is happening.

Lowe: We’ve come a long way from talking about it as a nice thing to do to building this into the business model. For example, every serious bank and institutional investor has made commitments around ESG investments. There are ringfenced pools of capital which can only be used to invest in ESG-compliant projects and companies.

This year, ESG-compliant bonds have outperformed the market for the first time as a sub-sector. Then there are ESG products – blue and green bonds and loans where there are margin ratchets if a borrower meets certain KPIs around sustainability. These parameters are linked to obvious things like carbon emissions, but the ‘S’ part of ESG is increasingly important as well.

le Bret: Whatever we do in this space, the rationale has to match the building blocks of our business. For example, we are open to gas facilities if they help sustain the stability of the power grid.

The underlying principle needs to match with our DNA as a bank.


van den Born: In the renewables space, the margin on these deals are exceptionally thin – particularly for the associated tenors. Is that something that borrowers can continue to enjoy in the current environment just because it’s viewed as green?

le Bret: There is an element of this, yes, and because the underlying cash flows are supported by the price of electricity, at times when energy is so expensive, the risk drops automatically. So we do see some thin margins. As we were discussing earlier, the repricing on the loan side hasn’t happened to the extent that we would like.

Shallow: You asked if we could afford to be green given the environment. Everyone talks about green as the biggest part of the ESG side, but particularly in the credit and political market, we’ve been quite focused on the ‘S’ and the ‘G’ in terms of our underwriting. If you think about our biggest risk in terms of loss, fraud is probably right up at the top of the list. Well, that’s all about governance. By working with companies with the right governance, that can be avoided or certainly mitigated. If you’re looking at the political risk of a mining project, the social element is huge in terms of community relations within the local area.

As underwriters, we can take a risk-based approach to ESG. Ultimately, if this is going to have a broad impact, sustainability needs to be sustainable. Insurers need to be able to embed this into what we do. But it needs to be for the long term rather than just a short-term trend.

I think we are doing a reasonable job.

Wyatt: I do worry a little bit about seeing those very long tenor renewable deals where we just don’t know how they’re going to pan out. 18 years on a solar project without a track record? That makes me a little bit nervous. We’re probably on the second batch of European refis now so they have more history but it’s not the same for all projects.


van den Born: Let’s change tack slightly and focus on the standardised policy wording initiative led by the Loan Market Association (LMA).

In August, following a few years-worth of drafts, the LMA published its CPRI model wording. I think we can all agree that is a laudable initiative and anything that serves to reduce the scrutiny from regulators can only be seen as a good thing.

I fully appreciate the challenges the LMA has had given the number of stakeholders involved. With what is a relatively mature product, trying to gain consensus amongst so many was always going to be ambitious.

It arguably falls short of being a standardised policy wording. The LMA has been at pains to point that out, framing it instead as a sensible starting point for negotiations. In that respect, it will probably be viewed as no more than a basic framework. What are your views on the initiative?

Shallow: Clearly, it’s a positive development. For buyers and sellers of the product to come together and create something like this is an impressive achievement for all those involved.

I suppose the proof is in the pudding in terms of if this will be a driver for new clients to come to the market. Clearly, there are going to be areas of contention within that from both sides. There are things that we don’t particularly like, there’ll be things that the insurance buyers don’t particularly like, and it’s ultimately about balance. I’m hopeful – it’s an impressive project in terms of the scope.

Rumpeltin: To date, it hasn’t really played into my day-to-day discussions with clients or brokers. My understanding is that it is meant to be a starting point for new entrants to the market but that those clients with existing wordings are welcome to stay with those arrangements, so long as it suits all parties involved.


van den Born: The LMA did say in its user guide that individual parties can depart from the wording and it’s not intended to substitute or override terms already negotiated between lenders and insurers.

But something we’ve seen is some insurers pushing back and insisting on clauses in the LMA wording, despite pre-agreed positions.

Wyatt: That’s not what I would have expected. There are certain clauses in there that have applied – and will always apply – to certain markets. As is always the case, individual banks and brokers will negotiate on an individual basis and will know what movement there can and cannot be for their organisation. The clients who have negotiated wordings that they’re happy with, and that give them what they need, will continue to use the wordings they’ve got.

My understanding when we started the project was that it was going to be a very basic template with nothing controversial in it – and that the ‘controversial’ bits would be negotiated separately and appear on a separate schedule. But for one reason or another, it didn’t end up being that, so we’ve ended up with lots of the things that should really be done by schedule, being shoehorned in square brackets into wording. I think that’s why it’s ended up being a bit more controversial than if it had been a more basic template as originally intended.

Lowe: I was on the working group, and the purpose of the project and what it has achieved is to establish credibility for credit insurance as a product, and a very decent starting point to understand some of the concepts. Back when I started at Standard Chartered’s credit insurance desk, we didn’t have anything. Now, having a document which sets out the legal basis of the Insurance Act, market standard terms around the operational management of that policy over time, as well as starting to think about typical commercial terms, whether that’s the waiting period or the indemnity language or exclusion, is an extremely useful and helpful thing to have. It’s a fantastic starting point for new entrants and I would applaud the LMA for their work.

le Bret: If we look at the LMA’s risk participation template, it’s already more or less there because all risk participations in the market look very similar. We no longer argue about the basics, but rather about things like splitting the cost to achieve recoveries. This has been very useful and has saved us all a lot of time. It’s also a very good way to focus our discussions on the understanding of risks and deals, as opposed to discussing the policies.


van den Born: Let’s talk about the concept of competition for capital with insurers. The insurance market as a whole has been experiencing a hard market with significant rate increases across multiple classes.

In the CPRI market, however, we largely follow the fortunes of the banks, where pricing has remained relatively static. For the insurers, that creates a degree of internal competition: there’s a suggestion that some of that capital could be diverted to support other areas within the insurance company because they’re enjoying massive rate hikes. What might be the implications for the CPRI market? Do you feel that there could be some capital restrictions?

Wyatt: Post the Monte Carlo event in September, there was general feedback from the reinsurance market that there’s going to be a lot of competition for capacity, that everybody sees opportunities for growth. And so all the different classes of reinsurance are going to be fighting for who gets the growth bucket. The early warning signs are that not everybody will necessarily get what they want in terms of renewals.

We saw some who fell by the wayside in different classes of business earlier in the year because of a lack of available reinsurance capacity. I think we’ll see more of that. We don’t know yet who will be the winners of this. Hurricane Ian is going to make a difference to reinsurers – that’s a massive market loss. As always, the wind blows in Q3, Q4, and that’s when we’ll see what happens with the reinsurance season, which will dictate who can do what next year.

Shallow: There are two dynamics at play. One is the reinsurance market and the other is the internal competition for capacity, or capital. On the reinsurance side, broadly speaking, specialty classes are quite popular – credit and political risk being one of them because it is largely uncorrelated with catastrophe risk. The benefit from diversification there is clear. As always, it’s the individual characteristics of a book and each individual reinsurer that will determine what their appetite is.

Within internal competition, it comes down more to the longer, medium-term profitability of the credit and political risk team. If they’re underwater, consistently losing money, then they’re not going to be allocated capital. If they’re making great returns for a balanced book, then they’re much more likely to be in that competition – they’re going to win.

I haven’t seen any constraint on growth as a result of reinsurance appetite or internal capital allocation. It’s hard to be broad-brushed with an answer to that. It’ll be very much company and team-specific in terms of their performance and how much reinsurance support they’ve got.


van den Born: We have seen a few new entrants to the market and there’s talk of some additional MGAs coming in. Is there enough space to accommodate them all?

Wyatt: If you come in with no legacy, now could be a great time to do so, especially if the loan market finally catches up and the prices go up and you can get enough reinsurance.

Shallow: Capacity is key. MGAs are unlikely to get significant support from existing markets, particularly if they’re playing in the same field. If there’s no benefit from a distribution perspective, why would we give capacity to someone who’s doing exactly what we’re doing?

But if they’re coming in with new capacity, or new capital providers, that potentially makes for more competition.

For insurers with a wider breadth, there potentially is an opportunity there. But we see quite a few MGA opportunities coming to us to do business that we already write. That’s not an interesting proposition for us.

Lowe: We would be keen to see uncorrelated capital, ie insurers with different participants from a counterparty perspective, entering the market. If you’re turning down four out of five enquiries, then finding a home elsewhere with strong creditworthy counterparties is clearly welcome.

What’s less useful to us is MGAs using paper with whom you already transact, or specialty vehicles that are just not creditworthy from the perspective of a bank rating. We want to see serious long-term participants. We’re not just going to take anyone’s paper who knocks at our door. We want to see commitment; we want to see engagement with a team that knows what they’re doing.

We’ve deliberately not onboarded a number of new entrants who came into the market in the last few years and we have been proved right in doing so, because a couple of years later they were no longer there. So we very much take our relationships and the longevity of those relationships seriously. That’s an important consideration to simply capital and counterparty.

le Bret: It’s a question of internal credibility, because if we onboard insurers that are not in the market for the long term, it can be a major issue as it taints the overall internal reputation of the product. However, it’s good to have new entrants in terms of diversifying the pool of capital providers that we have.

Wyatt: Do you ever feel there is a shortage of capacity?

Lowe: Yes, particularly for capacity-constrained countries and names. It’s not necessarily about getting you to do the back leverage term loans we were talking about earlier. Sometimes it’s about us having more great risk in Nigeria, Ghana and Angola but you’re full. So clearly there’s room for more capacity. But generally speaking, we get most of what we want from the people we want to work with. It’s an effective, efficient, and fairly deep and liquid market now.

le Bret: It’s also very important as a bank that we have insurers for the long term to understand our risk and asset classes. While we are very willing to educate and share as much information as possible, we like to work with specialists who understand the risks that we face, so there are no surprises if there’s a problem down the road.

Wyatt: There’s all this talk about longevity and creditworthiness of the insurer versus the capacity available. We’ve seen it come in waves depending on how the market performs. Do you get the biggest lines you can from the smallest number of insurers? Or can it be more cumbersome to have a lot of insurers on the policy, but it spreads the risk? Where is the market at the moment?

Lowe: We absolutely prioritise relationships, that’s incredibly important to us. But then there are other factors as well. So counterparty risk impacts the amount of capital relief and the actual returns of that support. Price is absolutely important – we want the best price the first time and without the reprice. We do diversify counterparty risk on insurers as a whole.

But we’re not going to onboard people that we’re not happy with in the first place. When you are in the luxurious position of being oversubscribed, then you can start thinking about prioritising based on a relationship. Most of the time, we get to where we need to be with a broad spread of people who we want to work with.

le Bret: It’s a product where the relationship starts with closing the policy rather than ends once the risk is transferred. And so being comfortable with the relationship is very important. It’s true that pricing matters a lot but spreading to the maximum number of insurers because we gain five basis points is also not a good strategy. It’s important to do multiple deals together, not necessarily big sizes, so that we know each other well, and we know there will be appetite for the next one.

Wyatt: When something goes wrong, that’s when the partnership really comes into its own, and because we’ve got multiple products you don’t want to fall out with somebody over one claim because you’ve still got 17 other policies to work with them on. It’s important how we behave with each other when things do go wrong.

van den Born: The important message I think we can all take away is that this remains an extremely resilient market. We have talked about the various cycles, which seem to be getting closer together, but history has shown that we have always been able to ride them out.

The statements and opinions made by the contributors of the roundtable discussion are those of the relevant individuals and do not necessarily represent the views of WTW.

WTW is not responsible for the accuracy or completeness of the third party views contained in this article.

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