STONEFORT GROUP – Building resilience in a risk-intensive world: Stonefort’s vision

Article written by Stonefort Group as part of the sponsorship of ACA Insurance Days 2024, whose content is the sole responsibility of its author.

The reinsurance market is undergoing significant transformations: more stringent regulatory requirements, increasingly frequent climate events, technological changes, and the emergence of new types of risks. In this environment, many market players are refocusing their strategic positioning, notably in the areas of Property, Liability, and Surety. Stonefort’s decision to reinforce its core reinsurance expertise reflects this broader trend. In the following interview, Stonefort Group management share its perspectives on market challenges, best practices, and a vision for the future.

Stonefort Group began as an in-house reinsurance solution for the German construction company HOCHTIEF Aktiengesellschaft in 2000, focusing on core lines such as workers’ compensation, general liability, surety, and property. Over the years, it evolved into a broader platform offering insurance and captive management services, and an investment fund for own assets now valued at USD 1.1 billion. With a renewed focus on its reinsurance core, Stonefort taps into its strong capital base, proven underwriting expertise, and close ties to HOCHTIEF and Actividades de Construcción y Servicios, S.A. (ACS), the ultimate Spanish parent.

Question: Dr. Feifel, the reinsurance sector has undergone considerable shifts recently. Could you briefly describe Stonefort’s journey and how your strategic choices align with broader industry trends?

(Dr. Feifel) – Our transformation at Stonefort is part of a wider movement: in the Property and Liability segments, the market is confronting a surge in severity and frequency of climate-related events, as well as rising claims costs—often referred to as “social inflation”—in various regions. Concurrently, frameworks such as IFRS 17 require increased transparency and rigor. Stonefort’s decision to refocus on core reinsurance for Property, Liability, and Surety stems from the market’s ongoing need for specialized reinsurers capable of handling complex risks and adapting quickly. Our path is simply a localized response to broader industry trends: strategic refocusing, value-chain optimization, and a need for flexibility.

Question: What factors led to the decision to refocus exclusively on your core reinsurance business?

(Dr. Feifel) – We assessed our various activities against the backdrop of challenges all players face, such as regulatory compliance costs (Solvency regimes, IFRS 17) or the need for targeted responses to emerging risks. By placing our direct insurance and captive management units into run-off, we redirected our resources to reinsurance—an area where demand remains robust, particularly in Property and Casualty. This aligns with a broader sector move where many companies are optimizing their portfolios to focus on a handful of profitable or specialized lines, aiming to gain deeper expertise and improve profitability amid increased competition and investor scrutiny. Today, we can better support our corporate partners and third parties with reliable capacity, forward-looking risk management, and the flexibility to respond quickly to market changes.

Question: Mr. Dehm, how does Stonefort Reinsurance capitalize on historical relationships, for instance with HOCHTIEF or ACS, and how does that address current market needs in Property, Liability, and Surety?

(Michael W. Dehm) – We view our shareholder network as an ecosystem of potential synergies. By collaborating with Turner—one of HOCHTIEF’s key subsidiaries—and their in-house broker TSIB, we support affinity programs with our reinsurance capacity that provide cost-effective coverage for subcontractors. This remains the backbone of our business model. We also see opportunities within ACS, our ultimate parent, by designing and coordinating group insurance programs and extending Stonefort’s expertise to additional business units worldwide. These initiatives will also enhance risk management and risk quality across the group and drive stable, profitable growth.

On other terms, our experience in Property and Casualty, together with our capacity are precisely what the market demands. And we also see substantial potential in Surety. The global surge in infrastructure projects has increased the need for bonding products. This requires both solid financial standing and detailed understanding of complex project dynamics. I believe we are well positioned as a credible reinsurance partner already versed in these risks.

Question: How are you approaching the expansion of third-party reinsurance business beyond the group?

(Michael W. Dehm) – Portfolio diversification remains essential. Beyond our internal programs where our U.S. construction portfolio is strong, we’re steadily growing partnerships with a wide range of clients in Europe and potentially APAC.

Our approach focuses on expanding our European footprint by strengthening relationships with both new and existing partners.

In Casualty and Property, we prioritize writing business in segments and structures that are less susceptible to volatility. This prudent strategy allows us to offer CAT capacity selectively, supporting sustainable underwriting practices and fostering long-term partnerships.

In Surety, success hinges on in-depth project knowledge—be it construction or financial guarantee obligations. Our goal is to work in collaboration with our partners, whether through quota-share, excess of loss, or hybrid structures. This also reflects a broader trend: reinsurers are cooperating closely with ceding companies on product design to accurately match coverage with ever-more intricate risks.

Question: Mr Kramer, at this point, does having your headquarters in Luxembourg provide advantages under heightened regulatory oversight and new standards (IFRS 17, Solvency II, etc.)?

(Cecil Kramer) – Luxembourg offers a strong platform: political stability, a mature regulatory framework, and proximity to European institutions. It’s particularly valuable for a reinsurer aiming to serve markets across Europe and beyond. At the same time, every sector stakeholder faces growing regulatory expectations, increasingly granular reporting obligations, and heightened caution from supervisors.

This is not unique to Stonefort; across Europe—France, Germany, and beyond—insurers and reinsurers must adopt IFRS 17 for financial reporting and demonstrate robust risk management, particularly in Property, where managing cumulative exposure to natural catastrophe events is essential.

Question: Going back to growth elements, Dr. Feifel, Mr. Dehm, can you elaborate on the new responsibilities with ACS and how they influence Stonefort’s operations?

(Dr. Feifel) – ACS has emphasized streamlining insurance and reinsurance programs worldwide to bring more consistency and optimize potential synergies. Major international infrastructure projects require robust coverage, especially for Liability and Surety. We serve as a “center of excellence” for the group to centralize and pool risks, optimize programs, and establish best-in-class underwriting standards. From our perspective, this is also an opportunity to bring more global programs under Stonefort’s umbrella. We’ll expand our reinsurance capacities to support these initiatives, ensuring consistent coverage and pricing for ACS’s diverse projects worldwide. The result is stronger collaboration between group entities and more streamlined risk management practices

(Michael W. Dehm) -The same principle applies to third-party clients: we focus on technical depth in Property, Liability, and Surety, along with niche or complex fields. We realize the market increasingly seeks more sophisticated solutions. But in the current stage our emphasis in general remains straight forward with our well-established offering. This said, down the road, we are not reluctant to look at other propositions such as parametric solutions, aggregated policies, or integrated Surety offerings that might include risk prevention services.

Question : Mr Dehm and Mr Joosten, when considering your vision, what are the current trends and challenges in the reinsurance industry, and how is Stonefort positioned to address them?

(Michael W. Dehm) – The market still grapples with capacity constraints, shifting regulatory landscapes, and heightened demand for comprehensive coverage. On Property we see an increasing frequency and severity of extreme weather events—floods, storms, and wildfires—continues to place upward pressure on modeling assumptions and pricing. With regards to Liability market, rising social inflation in the U.S. and higher claim severities in several global regions drive heightened complexity in professional liability, D&O, and environmental exposures. On the Surety side, with a robust post-pandemic surge in infrastructure projects, the need for reliable surety bonds has never been greater.

With this, insurers and cedents seek stable, long-term partners rather than purely opportunistic capital.

(Ronald Joosten) – Stonefort is nimble. Our lean structure, combined with solid governance, gives us the ability to adapt quickly. We focus on thorough underwriting, balanced risk appetite, and strategic partnerships. In other words, Stonefort responds by refining its project assessment expertise—particularly for large-scale construction and infrastructure projects—and cultivating close partnerships with specialized brokers. This blend of agility and financial strength is increasingly attractive to clients who want reliability, deep expertise, and straightforward decision-making processes.

(Michael W. Dehm) – In addition, our restructuring and adjusted strategy have allowed us to attract top talent in a highly competitive market. These new hires bring valuable expertise and fresh perspectives, further enhancing our ability to innovate and meet the evolving needs of our clients.

Question: Mr Kehrbein, beyond specialization, how do you ensure financial robustness and maintain trust among clients and brokers, particularly as the sector aims to demonstrate its resilience?

(Sven Kehrbein) – At Stonefort, our resilience and credibility rest on four foundational pillars.

First is robust capitalization. We’re fortunate to have a strong balance sheet and maintain a high solvency ratio, which is reflected in our A- rating. This financial strength underpins every commitment we make to our ceding companies.

Second, disciplined investment management keeps us vigilant. While the current environment of higher interest rates offers the potential for enhanced yields, we are careful to avoid excessive credit or liquidity risks. Being prudent about our investment mix allows us to secure stable returns without compromising our capital.

Third, a data & underwriting focus is woven into the fabric of our day-to-day operations. We have a rigorous oversight process for exposures, and we constantly monitor both our reserves and key risk indicators to ensure long-term profitability and sustainability.

Finally, we place great emphasis on long-term relationships. Reinsurance is a people business at its core, so we work hard to cultivate enduring partnerships with ceding companies and brokers. By emphasizing stability and transparency – particularly during volatile market periods – we build the trust that’s essential for lasting collaborations.

Question : How do you see Stonefort Group, and more broadly the reinsurance landscape, evolving in a 3- to 5-year horizon?

(Sven Kehrbein) – We anticipate several developments that will shape our reinsurance strategy in the years ahead.

To start, we see continued growing Property demand, spurred by climate-driven exposures and increased urbanization. The market will rely on agile capacity and advanced modeling to navigate more frequent and severe weather events.

Then, we expect heightened Liability pressure, particularly as legal complexities and large-scale claims – such as class actions and environmental disputes – continue to climb. In this area, strong underwriting discipline and prudent reserving will be crucial to address the rising frequency and severity of losses.

On the Surety side, significant needs will emerge amid global infrastructure projects and the subsequent demand for robust financial guarantees. Clients will look to us for expertise in evaluating and underwriting large, complex projects, where financial security is paramount.

Given these trends, Stonefort remains committed to an agile model, focusing on our core lines while embracing innovation. Above all, we see collaboration as indispensable: insurers, reinsurers, public authorities, and businesses must pool their expertise and resources. By working together, we can bolster resilience in an era of increasingly systemic risks.

Question: Dr. Feifel, Mr Dehm, what message would you like to convey to your stakeholders and the wider industry?

(Dr. Feifel) – We’re proud of the progress we’ve made – streamlining operations, reinforcing our balance sheet, and sharpening our strategic focus. Our success so far shows the value of staying true to core competencies while adapting to shifting market needs.

(Michael W. Dehm) – As we move forward, we remain committed to working closely with all stakeholders – clients, brokers, and business partners alike. We’re prepared for growth but remain humble. Delivering solid underwriting results, providing reliable capacity, and fostering genuine partnerships will always be at the heart of Stonefort’s approach.