Comment - Success hangs in the balance.

(From Reinsurance)

Byline: Henry Keeling, chief executive of reinsurance operations, XL Capital.

Despite some of the clouds that hang over the sector, many reinsurers are reporting record-breaking profitability for their current underwriting years. The sector as a whole is witnessing healthy levels of activity and is taking a much needed, balance sheet-driven, technical approach to writing business. But, of course, the past can hang heavily over us - and is something we must face up to, as this writer can only too personally attest.

Nevertheless, as the oft-quoted words of Mark Twain spring to mind - 'Reports of my death have been greatly exaggerated' - the question is how to counteract the soothsayers among us who foresee an early curtailment of the hard market conditions and even a return to a period of financial uncertainty. After all, a perception that the reinsurance sector is going to head back towards the lows of cyclicality, before much of the essential strengthening medicine has been consumed (remember, even though Tigger loved Roo's medicine, it was Roo who really needed it), would be detrimental both to our clients' desire to trade with us and to our own morale.

Trust is key

The whole point of reinsurance is that clients need to trust that their reinsurers will be capable of making good on their policies in the event of a claim and in order to do that we need to have strong balance sheets that can be shared with our customers.

Maintaining a buoyantly viable reinsurance market is key to reassuring clients and rating agencies alike. And that means getting down to the essential business of underwriting profitable risks, thus enabling us to provide the vital assurance to clients so they, in turn, can continue to soundly manage their own affairs.