The retrocessional reinsurance market is one area where capital is in additional demand, which suggests pricing may stay attractive there and Hiscox Re & ILS expects to give you the chance to proceed supporting that market on the renewals, CEO Kathleen Reardon said yesterday.
Reardon, the Chief Executive Officer of Hiscox Re & ILS, the international reinsurance and insurance-linked securities (ILS) arm of the Hiscox Group, was speaking during a panel discussion moderated by Andy Marcell, Aon’s CEO of Risk Capital, yesterday.
She discussed the ILS market and the present state of investor sentiment within the space, saying it is not any longer the one game on the town, for investors.
“A number of the ILS markets, at first, produce other opportunities right? We’re not the one game on the town. The danger free rate, the rate of interest environment is pretty compelling elsewhere. So I believe that may do so much to take care of the present rate environment that now we have,” Reardon explained.
She went on to say that, “I believe that’s one explanation of why the capital inflows haven’t been too abundant coming into Bermuda, which historically has been a natural place for that to occur.
“Also, a number of the ILS investors that supported us over the past 5, 6, 7 years have participated within the heightened loss environment they usually have their very own rebalancing to do, due to bond and equity portfolios.
“Nine months doesn’t make a tough market, we will’t say success after nine months. So I believe a number of those ILS investors are saying, let’s get through a 12 months, let’s see the rates sustain into 2024.”
Reardon went on to say that the ILS investors provide a key source of capital and that the reinsurance industry needs all sources available to it, especially for a number of the peak perils.
“We’ve risks like cyber, which might be predicted to outpace property cat by 2030. We’d like all pots of capital, so we don’t wish to be in this example perpetually. But within the meantime, I believe we’re servicing the demand pretty much,” she told Aon’s Marcell.
Then, Reardon moved on to debate the retrocession market, which is one place she sees a possibility for Hiscox Re & ILS to take care of its key position as a retro author.
“Hiscox has been offering retro capability for the higher a part of 50 years and the tenure of our underwriters goes into the a long time,” Reardon said.
“So, without delay we’re we’re a top 10, if not top five retro provider and that was where the terms and conditions tightened, that was where it happened probably the most,” she continued. “We actually did get all the way down to much narrower coverage, really putting that capability where it’s needed, out within the tail, where the reinsurers need our support.”
Closing to say, “We expect our support to proceed, we’re experts in that area. But that could be a capital that’s in demand, so I expect those prices stay pretty attractive.”