11th September 2022 – Author: Matt Sheehan
Kathleen Reardon, Chief Executive Officer (CEO) at Hiscox Re & ILS, has said that she sees “interesting opportunities” for her company at the upcoming January 1st renewals, as signs point to continued reinsurance price increases.
Speaking in a recent interview with Reinsurance News, Reardon explained that “the direction of travel currently points towards further rate strengthening” at the key 1/1 renewal period.
Unlike other recent renewal years, reinsurance capacity is becoming constrained at a time when demand for coverage is continuing to increase.
The withdrawal of capacity from the market is creating less supply, Reardon notes, meaning that reinsurers can be more discerning about the business they take on, and more open to new opportunities.
“Overall, we expect the reinsurance market to continue to harden,” Reardon told Reinsurance News. “We have seen a long period of reinsurers failing to meet their cost of capital and, more recently, significant retrenchment of property cat capacity.”
“While the reinsurance industry has seen significant rate increases over the past few renewal seasons, the pricing needs to be adequate for the evolving landscape ahead of us.”
Specifically, Reardon highlighted property catastrophe as one of the best areas for Hiscox Re & ILS to seek continued growth, given the increased demand for limit in this space.
But the company also has specialised offerings in property risk, cyber, marine and other specialty classes, where demand for reinsurance support is expected to rise as well.
“On our property catastrophe portfolio, we were ahead of the curve in addressing the recent loss trends and are now in a strong position to support clients with meaningful capacity and quoting capability,” Reardon concluded.
During the first half of 2022, Hiscox Re & ILS achieved a 13% rate increase, which the firm attributes to capacity constraints in retrocession, North American catastrophe and cyber, and greater demand from clients. All of this equates to a cumulative rate increase of 52% since 2017.
The business also reported a signficant 37.1% increase in gross written premiums to $822.7 million in H1, as ILS net inflows reached $561 million and assets under management hit $1.9 billion. This helped to offset a loss of $107.4 million at the larger Hiscox parent company, which was primarily due to a negative investment result.