David Brown, Chairman and interim CEO of Bermuda-based reinsurer Hamilton Re, has said that reinsurers should be looking for “better pricing and better terms” at the end of year renewals.
Speaking in an interview with Artemis around the time of this year’s virtual Monte Carlo Rendez-vous event, Brown said that he expects to see reinsurance and retrocession rates continue to increase from their current levels.
“The market is still hardening, and we’ll know we’re in a hard market when deals don’t get done,” he said.
“Line by line, the market is approaching historically hard levels of rate. In the retro market, it will be interesting to see how much capacity there is and what the terms and conditions are.”
Brown noted that, while there has been price firming across many lines, increases have not yet spread across the whole market.
Even in property catastrophe lines, where rates are thought to be adequate, Hamilton Re does not yet consider pricing to be high enough to push the limit of its risk appetite.
“While we are not yet at the historic highs after 9/11, given the active hurricane season combined with other market uncertainty, we feel rates will keep firming,” Brown told Artemis.
Hamilton Re is expecting firming to last well into 2021, with the main unknown being how long the pandemic will affect the risks the company writes, and the long-term impact of COVID on its business.
This is particularly true for areas like airlines and cruise industries, where there is still significant uncertainty about how they will be operating over the next few years.
But Brown is still optimistic about Hamilton Re’s prospects in this environment and said that the company is seeing opportunity across its specialty insurance and reinsurance business, both in existing lines and in new lines of business.
And following on from the acquisition of Pembroke and Ironshore Europe from Liberty Mutual last year, the company is poised for growth, Brown says.
“We’ve been building our company for several years, through one of the softest markets on record. This is the market we’ve been waiting for at Hamilton and, thanks to our recent acquisition, we are well positioned to thrive in it,” he remarked.
“We’re being selective in our growth, focusing on the areas we know best, but the vast majority of our lines are seeing rate increases.”
Brown added: “We couldn’t have predicted this hardening market when we did this deal and, with hindsight, our acquisition was the right move at exactly the right time.”