XL Re has scaled back on its involvement in Chile's reinsurance market after failing to secure the structural changes and pricing correction it believed were necessary in the wake of the earthquake in February, according to a report in Insurance Day.

Jamie Veghte, chief executive of XL Group's reinsurance operations, who was attending Les Rendez-vous De Septembre 2010 in Monte Carlo, told the London-based publication that the lack of pricing correction following the catastrophe has significant implications for other emerging markets and expressed his frustration at the way the markets reacted after the event. "Chile was one of the largest non-US events in the last 10 years," he said. "We had a significant amount of July 1 renewals in Chile and I would describe the outcome of those as very disappointing."

Mr. Veghte said XL Re had planned to increase its participation in the Chilean market after the quake, but subsequent conditions meant that had not been possible and the reinsurer actually reduced its share.

"I have to believe some major reinsurers that have massive market shares around the globe didn't view the level of corrections necessary in that market as we did," he said.

"We felt that there were significant structural changes that were necessary in that market to make it attractive for us to increase our participation and we got about 60 percent of the way to where we wanted to get.

"I'm disappointed not just about the specific renewals in Chile but about the implications for trying to write business in emerging markets where post-loss the corrections that seem to take place are not as significant as they are in more developed markets."

Mr. Veighte said that a number of the emerging markets were very dependent on big proportional reinsurance structures.

"Unfortunately in some of them - particularly in Chile - those structures included event limits that were almost meaningless; the attachments were at such a high level, commission structures that did not reflect the reality of the underlying business or have adequate profitability for reinsurers," he said.