Dear friend,

I’ve just seen the latest on an extension to Hannover Re’s K5 securitisation.

I just love chief executive Wilhelm Zeller’s repeat of a turn of phrase he first coined back in February last year as he unveiled a 22% shrinkage in US catastrophe aggregates.

Weatherproof was the word back then — and weatherproof is the word he is repeating now. Apparently today Hannover is more weatherproof than ever.

Now forgive me for being obtuse — but as far as I am concerned weatherproof is not something reinsurers are supposed to be.

A reinsurer should be no more weatherproof than a coal miner is carbon-neutral.

Reinsurers are supposed to carry risk — for a generous fee.

That’s the job in hand, that’s the product.

Get the product right, get the price right and you will make generous returns from people who want you to take risk away from them.

Now don’t misunderstand me, I can perfectly well see why Hannover is doing this, and what’s more it has an excellent track record of producing above average returns with low historical deviation in results.

But when all non-wind classes and territories are under heavier competition than they have been at any time in the last five years and US Cat rates are busting new highs, surely the smart money is getting a little more wind-exposed rather than weatherproof?

At these prices why not use that extra capital to help you write more good stuff?

I also always thought there was no such thing as a bad risk, only a bad underwriter.

Or am I missing something?