IQUW eyes continued growth in hard cat reinsurance book
Bermuda-based IQUW saw continued rate increases in the January renewals for property reinsurance, according to Bermuda chief executive officer and head of reinsurance Stephen Young.
While premium increases were in the mid-single digits, the renewal process was more orderly than year ago, Young said, with demand for reinsurance increasing.
However, the specialty market suffered from overcapacity and Young said signings were challenging.
“Reinsurance capacity increased through the year-end renewals, as an improvement in asset valuations and profitability drove greater availability of capital,” he said. “Demand has remained robust, with property catastrophe limits, purchased globally, up by low to mid-single digits year-on-year.”
He added: “Unlike January 1, 2023, the biggest change at the 2024 January Property Cat renewals was capacity supply mostly matched required demand.
“During the January 1, 2024, renewals, we still saw some challenging areas with the lack of reinsurance capacity, such as mutuals in the Midwest. Throughout the renewal, lower layers were more challenging to place than upper layers, as reinsurers are still wary of attritional perils and climate change.
“All in all, we experienced a more balanced, orderly market in the property space, with fewer structural changes and non-concurrent contracts. “
Looking forward, he said: “We have seen a more orderly period recently with enough capacity to meet demand, however, this has led to an increased signing down trend in the market.
“However, as we get closer to June 1 and July 1, we continue to see an increased requirement in Property Cat capacity in US hurricane exposed states, and from some global accounts. So, while there’s excess capacity available, some of that may be used to support this increased demand.
“All in all, we’re still seeing a strong market, maybe not as hard as last year, but still a very good market from a reinsurer perspective. The demand/supply balance is probably slightly tipped in reinsurers’ favour but at the same time, capacity is available so it’s matching up well.”
Young said catastrophe demand was driven by inflation, which had pushed up valuations which in turn meant regulators and rating agencies required insurers to buy more insurance.
Young said the specialty market was more complicated as capacity had increased in marine, aviation and energy. He said a spike in prior year claims had affected IQUW less than other re/insurers as the company had only been formed in 2020.
“In specialty reinsurance programmes, we have seen significant overcapacity and January 1 renewals saw significant sign-downs as many contracts were over-placed.
“Cyber saw flat renewals, while in the future, we may see less buying from a quota share and stop-loss perspective and might see an increase in interest in cyber cat once the market as a whole has agreed on event definitions.”
He added: Our IQUW Bermuda strategy remains largely unchanged as we continue to execute our Property and Speciality reinsurance portfolio build-out.
“We will continue to add staff to the team in 2024 and expect to see growth driven by Property and Cyber markets in Bermuda.
“During the year, we expect to grow in Property as we believe there are still many opportunities in this space where we can provide expertise and seamless service to our brokers and clients. While Specialty capacity is available in many lines, there are still plenty of opportunities that we are continually exploring.”
Young said IQUW was continuing to benefit from its business strategy of using technology to find additional data and marrying that information with experienced underwriters to react more quickly and seamlessly for the company’s clients.
He said IQUW was also hiring more meteorologists, seismologists and data scientists to uncover additional insights, a practice which he said paid off “every day”.
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