Nicolai Tangen, CEO of the Norwegian Sovereign Wealth Fund, interviews Andreas Berger, CEO of Swiss Re, the world's leading reinsurance company. The Norwegian fund owns 1.6% of Swiss Re, worth approximately $800 million.

The conversation covers Swiss Re's role as the 'insurers of insurance companies,' exploring how reinsurance works, emerging risks like cyber and AI, and the cyclical nature of the industry. Berger also discusses his personal background, including being born in Rwanda and how early exposure to uncertainty shaped his leadership approach of 'strategic patience.'

How Reinsurance Creates Value Through Global Diversification

Swiss Re operates as 'the insurers of the insurance companies' or 'the central bank of the insurance industry,' providing financial protection to insurance companies worldwide.

Insurance companies benefit from Swiss Re's global diversification because 'risks are not correlated' - standalone insurance companies need more capital without this diversification.

Natural catastrophe insurance demonstrates dramatic diversification benefits: 'The capital return on a standalone basis for natural catastrophes is 8%. If you look at it at group level, it increases to 40%' - Andreas.

Three Business Units Provide Uncorrelated Risk Exposure

Swiss Re operates three main units: life and health reinsurance, property and casualty reinsurance, and Corporate Solutions for large corporate captives.

'Life insurance is not correlated to P&C reinsurance. And within P&C reinsurance, the two units are not directly correlated because corporate solutions reinsure externally' - Andreas.

Cyber and AI Risks Challenge Traditional Insurance Models

Cyber insurance remains limited because 'the deep understanding of the cyber exposures is not good enough yet' and worst-case scenarios are unclear.

Insurance companies reduce cyber exposure by 'offering smaller limits because we don't know actually what the worst case scenario actually could look like.'

AI risks stem from data biases and algorithm malfunctions: 'People work with data. And data has biases too. And then the algorithms come in' - Andreas.

Swiss Re maintains strict AI governance with 'human in the loop' - 'We don't allow AI to take decisions for the humans.'

Cycle Management Across Multiple Insurance Lines

'There's not only one cycle. Each product, each line of business, as we call it, has a different cycle' - Andreas explains the complexity of insurance market timing.

Swiss Re uses a five-year forward-looking view of their 'target liability portfolio' to manage capacity deployment across different cycles.

When one cycle declines, 'I limit capacity deployment to that area' and focus growth on uncorrelated areas that aren't declining.

AI Implementation Requires Clean Data Infrastructure

'We are a data company and people company. We think in data models' - Swiss Re has established a clean data strategy with front-to-end ontology.

The biggest industry problem is 'data and technology is outdated, it's fragmented, huge IT legacy and IT debt, so that the individual AI use cases are still standalone use cases.'

Swiss Re uses AI to 'augment, to improve our decision making, but we also use it to improve our processes' rather than replace human judgment.

Strategic Patience Shaped by Early Life Uncertainty

Born in Rwanda, Andreas experienced a coup d'état and Portugal's revolution, teaching him to 'take a step back and try to analyze what does that actually mean.'

'Strategic patience' is his approach: 'Don't panic' but analyze situations thoroughly before acting, both personally and professionally.