--- title: 📺 Masterclass | The History of Reinsurance - 3/6 description: "🚀 Explore the challenges and innovations that have shaped the modern reinsurance landscape: from the early days of risk pooling to the rise of new technologies, this video series will make you travel through time." image: https://blog.arundore.com/hubfs/2%20(5)-1.png --- [![Arundo_Logo_RVB-1](https://blog.arundore.com/hs-fs/hubfs/Arundo_Logo_RVB-1.png?width=115&height=76&name=Arundo_Logo_RVB-1.png)](https://www.ccr-re.com/en/home) - [News](https://blog.arundore.com/en) - [Reinsurance Tutorials](https://info.arundore.com/reinsurance-tutorials) - [Women of Power](https://info.arundore.com/women-of-power) - [MTPL Losses France Study](https://info.arundore.com/assessing-the-losses-of-severe-personal-injury-victims-in-motor-liability-cases) - [Arundo Re Talks](https://www.arundore.com/en/arundo-re-talks) - [français-FRANCE](https://blog.arundore.com/fr/histoire-de-la-reassurance-3) [Home](https://blog.arundore.com/) [The reinsurance and insurance blog of Arundo Re](https://blog.arundore.com/en) 📺 Masterclass | The History of Reinsurance - 3/6 18 April 2023 4 min read # 📺 Masterclass | The History of Reinsurance - 3/6 ## Patrick's Masterclass - Video n°3  ## (French & English subtitles avalaible directly on YouTube) Hi everybody 👋   I am Patrick. Today we keep on with our quest to fill the puzzle and find our way in the maze.   Once upon a time only one tutorial would have been enough to deal with the players at stake.   Our world is more complex today.   Let’s start! ⏬   **1) LLOYD’S 1975:** - **Lloyd’s is (since 1688) a specific body working only through brokers** who has moved from underwriting marine insurance to all types of (re)insurance risks over the world - The fame and position is unique with 7 666 registered underwriters writing any kind of risk with fund providers, the Names, committing their assets without limits. - **“Those were the days” with a corporation of white men in dark as shown in this photo showing the board members at that time! ** **     Today LLoyd’s** - Has dramatically changed overcoming dangers of bankruptcy following ensuing losses - In 1991 (500 Mios £), 1992 2Bns £, 1993 2.3 Bns £ … (**LMX crisis** due to Piper Alpha, Property Cats, asbestos& environment losses…). - In 1996 the newly formed **Equitas took over 1992 and past liabilities which Lloyd’s could not close** allowing for anew Lloyd’s - In 2001 following September 11th, Hardly 100 Names with unlimited commitment remain, no new one is allowed to join on this basis. 3000 names stay with capped liability, about 15% of the Lloyd’s capacity - There has been a concentration of syndicates, about 80 down from around 400, the weaker, worst performing disappear, the remaining ones are bigger and stronger - Is under tighter than ever control of the Central Body (underwriting, results, solvency…) - **Works on a radical modernization** of processes, tools, partners with high-tech companies **to make it “better, faster, cheaper” (utilizer une typo qui ressemble à celel des Daft Punk Harder better Faster Stronger) John Neale Lloyd’s CEO meaning that t****he old prehistoric (re)insurance animal Lloyd’s will, unlike the monsters of the past you can only the bones of in museums, enjoy a strong revival!** **2)** **BERMUDA** - **1975: Bermuda was mainly known as a mysterious triangle!** **Appeared on the radars** - **In 1986, the 1st wave of cies**created to face the shortage of traditional capacity for US Casualty business - **In 1992, 2nd wave**following the shortage of traditional Cat Property capacity   - **New waves appeared in 2001 and 2006 after new Cat capacity crisis.** These cies were bringing capital, new tools and solutions, ILS, ILW, side cars…what was called globally ART - **Tail winds:** business favorable environment, strong links with financial investors, attraction of high skilled resources, agility to surf on challenges were keys for **Today’s success Bermuda is a decisive player in all aspects of (re)insurance:** - Thousands of captives - Insurance and reinsurance cies - Dedicated ART and legacy cies. - 42% of Lloyd’s capacity, 36% of global Cat capacity and 124 Bns$ of global capital. (source ABIR) **Tomorrow: Singapore the new Bermuda?** - Parallel to the shift to Asia of the world economic power and global insurance industry - Singapore has entered the race as a financial hub with fiscal advantages for ILS, - Singapore invests in financial services, forecasts to hire 3000 to 4000 employees yearly - Hong Kong tries to be an alternative and some others might follow soon. **3) RATING AGENCIES** **1975** - I have learned quickly about Swiss re, Munich Re, Kölnische Rück (the oldest reinsurance cy in the world, now Gen Re), Lloyd’s … - **Rating agencies were hardly known,** but in the States - Balance sheet study was my duty to assess the quality of a client, a competitor. **Today** - Reading balance-sheets is for happy few addicts - **Rating agencies have a decisive power**: **you must be well rated.** - Any change down by one notch in your rating is a potential threat on your book of business, relationships whatever the good links you may have built over years. - This spiral down can bring you out of business in a very short time. - Their importance is such that the evolution of capital models has shaped how reinsurers are structured and how capital is allocated - Initially big 3 US ones, more have emerged in the meantime. **4) SUPERVISORY BODIES AND REGULATIONS FROM GOVERNMENTS**   **1975** - Supervisory bodies were more controlling the split by type of invested assets than insurance risks. - **Solvency 1 rules** applied were **quite basic.** - **Control of reinsurers**, if any, was **not sophisticated** allowing creations of crook cies (Daiichi Mutual Re, Kobe re….) - **Reinsurance, international by nature**, could develop over the world along with globalization **without too much of trade barriers** **Today** - **Trade barriers have increased** a lot adding costs for (re)insurance cies - **Supervision has improved** to a high standard, although not yet everywhere. - Emergency of new risks, increase of volatility of others lead to a continuous adaptation of supervisory bodies, who control both sides of the balance sheets. - **Control of reinsurance cies is tighter**and now **includes**: **ESG compliance** a major factor both for Controlling authorities and rating agencies , and a difficulty between Fiscal authorities and Supervisory Bodies remains: technical reserves have to be prudent to protect the insureds but not oversized to avoid taxes on profits! **Nota bene : Frontings.** - Increased regulations, solvency requirements, obstacles to outside penetrations have led to the development of fronting arrangements to bypass these rules. - It produces fees for the fronting cies, give them additional gross capacity allowing required market capacity to be completed and allows players to keep on working and diversifying their book. - It may also be felt as an artificial obstacle to the adequate pricing of risks. **5) MODELLING COMPANIES**   **1975: not on the map** - My reinsurance teachers did not tell me about models. - I have not found the term « model » in the famous book « Reinsurance and Principles « from Dr Gerathewohl CEO from Munich Re, published in 1982 - There was awareness about exposures, control of these, PMLs but hardly anything more. **Since then**   - **1987** Karen Clarke created the 1st modelling agency **AIR** (now **Verisk**) in 1987 - A string of Cat losses from 1988 to 1992 gave a push for this approach with the creation in **1989** of **RMS** (just taken over by Moodys) and in **1994** of **Equecat** (now Corelogic). **Today: modelling cies are a costly but a necessary integral part of our industry**   - **Modelling cies** face competition from dedicated teams of brokers and reinsurers. - **Market Loss estimates are swiftly produced by competing Cat modelers** with wide differences casting sometimes a doubt on their reliability. - **Pricing** of risks and treaties requires exposures data’s, modelling information. - **Every year new models and updated ones are developed**, unmodelled events happen, others appear not modeled accurately. - **Models: a necessity for risk carriers including investors**   Bye for now 👋 **[![ See all videos ](https://no-cache.hubspot.com/cta/default/6458234/3299fa79-f83e-4b5a-b595-20f319bcc83e.png)](https://cta-redirect.hubspot.com/cta/redirect/6458234/3299fa79-f83e-4b5a-b595-20f319bcc83e)**   --- ## 📺 More episodes are coming... Subscribe now to receive them in right in your mail! 📥   [mailto:?subject=📺%20Masterclass%20|%20The%20History%20of%20Reinsurance%20-%203/6&BODY=I%20found%20this%20article%20interesting%20and%20thought%20of%20sharing%20it%20with%20you.%20Check%20it%20out:%20https://blog.arundore.com/en/history-of-reinsurance-3](mailto:?subject=📺%20Masterclass%20|%20The%20History%20of%20Reinsurance%20-%203/6&BODY=I%20found%20this%20article%20interesting%20and%20thought%20of%20sharing%20it%20with%20you.%20Check%20it%20out:%20https://blog.arundore.com/en/history-of-reinsurance-3) ## Latest articles #### 30 May 2023 ### [📺 Masterclass | The History of Reinsurance - 6/6](https://blog.arundore.com/en/history-of-reinsurance-6) Patrick's Masterclass - Video n°6 (French & English subtitles avalaible directly on YouTube) Hi everybody 👋 I am Patrick. Today for the last tutorial,… ### [+](https://blog.arundore.com/en/history-of-reinsurance-6) #### 16 May 2023 ### [📺 Masterclass | The History of Reinsurance - 5/6](https://blog.arundore.com/en/history-of-reinsurance-5) Patrick's Masterclass - Video n°5 (French & English subtitles avalaible directly on YouTube) Hi everybody 👋 I am Patrick. Today we shall play a videogame… ### [+](https://blog.arundore.com/en/history-of-reinsurance-5) #### 3 May 2023 ### [📺 Masterclass | The History of Reinsurance - 4/6](https://blog.arundore.com/en/history-of-reinsurance-4) Patrick's Masterclass - Video n°4 (French & English subtitles avalaible directly on YouTube) Hi everybody 👋 I am Patrick. We have addressed the issue of… ### [+](https://blog.arundore.com/en/history-of-reinsurance-4) #### 4 April 2023 ### [📺 Masterclass | The History of Reinsurance - 2/6](https://blog.arundore.com/en/history-of-reinsurance-2) Patrick's Masterclass - Video n°2 (French & English subtitles avalaible directly on YouTube) Hi everybody 👋 I am Patrick. Last time we have initiated a… ### [+](https://blog.arundore.com/en/history-of-reinsurance-2) [View all articles](https://blog.arundore.com/en) **Arundo Re** 6 RUE FAVART 75002 PARIS - FRANCE [Contact us](https://www.arundore.com/en/contact) [Job opportunities](https://www.welcometothejungle.com/en/companies/arundo-re) [![Arundo_Logo_RVB-1](https://blog.arundore.com/hs-fs/hubfs/Arundo_Logo_RVB-1.png?width=202&height=133&name=Arundo_Logo_RVB-1.png)](https://www.arundore.com/en/)   [Terms of use & legal notice](https://www.arundore.com/en/legal-notice) I[Personal data protection](https://www.arundore.com/en/gdpr) I © - Arundo Re 2026 All rights reserved ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Patrick Delalleau", "url" : "https://blog.arundore.com/en/author/patrick-delalleau" }, "dateModified" : "2023-04-18T06:30:00.463Z", "datePublished" : "2023-04-18T06:30:00.000Z", "headline" : "📺 Masterclass | The History of Reinsurance - 3/6", "image" : [ "https://blog.arundore.com/hubfs/2%20(5)-1.png" ], "mainEntityOfPage" : { "@id" : "https://blog.arundore.com/en/history-of-reinsurance-3", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.arundore.com/hubfs/Arundo_Logo_RVB-2.png" }, "name" : "Arundo Re" } } ```