As in previous years reinsurers are struggling with macroeconomy, including investment environment. Yet, the market further progressed in the period of "THE GREAT UNCERTAINTY"

XPRIMM: How was the year 2021 in general for the reinsurance industry in your opinion?

Julia KHMELNITSKAJA: Current reinsurance market is very well capitalized and resilient with even new capital arrived in course of challenging 2021. As in previous years reinsurers are struggling with macroeconomy, including investment environment. Broader look at the market provides quite a different picture. The market further progressed in the period of "THE GREAT UNCERTAINTY":

• Nat Cat losses, including losses driven by secondary perils are on the rise for several years in the row making almost every year breaking the records. For 2021 these are summer flood in Europe, being 1 in 400 years event, hurricane Ida in the U.S., tornados in Texas, California wildfires.
• Loss cost inflation.
• Social inflation.
• Aftereffect of COVID-19 losses.
• Prices in the retro market etc.

All of this requires from reinsurers reassessment of modeling and underwriting approach. In a nutshell, reinsurers need a larger margin to cover the uncertainty and meet underwriting result and return on equity targets.

XPRIMM: Would you say a few words about treaty renewals in January 2022?

Julia KHMELNITSKAJA: It was a stressful renewal for clients and reinsurers full of exhausting discussions and sometime frustrating outcomes. As a general comment, reinsurers were showing more underwriting discipline and pushed for prices and priority increase based not only on losses experience, but also for loss free accounts using the market momentum. CAT programs dominated renewal discussions in many territories including CEE.

Major Russian renewals are property and engineering "per risk". The clients kept insisting on the increased capacity. Local property and engineering losses added frequency and in certain cases severity to the statistics and raised discussions on loss cost inflation, but more importantly raised accumulation concerns.

With very few leaders in the game, capacity available depends on the price, rating and each reinsurer appetite for the client and the program. Though reinsurers seem to apply "general increase" on everything, it is very difficult to comment on the actual rates movement. With differential terms being the norm, the price is now "personalized" for "each and every" program and "each and every" reinsurer.

XPRIMM: How would you estimate the results of Willis Towers Watson for 2021? What are the plans of Willis Towers Watson for this year?

Julia KHMELNITSKAJA: Speaking for the treaty side only, Willis CIS had another great year with double-digit organic growth. In course of the year Willis CIS successfully completed quite a few very challenging placements meeting both capacity and rating criteria. Going forward we would like to be ambitious in our plans for growth.

XPRIMM: What forecasts for 2022 would you give for the Russian reinsurance market?

Julia KHMELNITSKAJA: Reinsurance buying will continue to be difficult considering competitive underlying market and a huge gap between the trends of the international reinsurance market and local underlying rates. In addition, one must appreciate that Russian reinsurance buying has very limited base and hence is the volatile position of reinsurers. This leaves no choice for reinsurers, but to improve their margin within the existing framework.

Interview by Marina MAGNAVAL