Discipline ‘trumps everything’
The reinsurance market’s ‘new normal’ has become a reality, with the cyclical nature of rates likely gone for good, according to Kathleen Reardon, chief executive officer of Hamilton Re.
“We can retire the use of ‘hard’ and ‘soft’ descriptors, because in the marketplace we’re dealing with right now we’ve got insurance-linked securities (ILS), low interest rates, political constraints, pressure to digitise everything—and it’s all forcing clients and reinsurers to change their business models in real time,” Reardon told Monte Carlo Today.
“There are also some pockets of opportunity: we’ve seen some rate rises in property direct & facultative and excess casualty insurance. ILS has been cemented as a durable force, and I would even go so far as to say that it is actually helping to change the landscape. It’s reshaping the industry dynamic, and that is going to be very evident with what AIG and Markel are doing.”
Reardon stressed that underwriting discipline trumps everything—something that hasn’t changed in the market—and that those who get that right at January 1 will be successful.
She added that ILS capacity has grown and Hamilton Re sees that continuing, but she doesn’t see it displacing the traditional model; there’s always going to be a place for traditional capital, she said.
She also questioned whether the independent ILS model is changing, as firms like Nephila become associated with a traditional market player in the form of Markel. The fact that this is happening in Bermuda, which has often led the trends in this space, could be significant, she said.
Reardon thinks ILS will broaden its remit and move into additional classes of business, but there will always be a place for the traditional players, as there are always new risks.
Looking at where Hamilton Re is positioned in the market, Reardon said: “We were built for this market; we were born in a soft market, so by design we’re lean, nimble, client-centric, and deliberately leveraging data science and technology.
“We don’t have legacy systems or culture, so we’re in a good place there. For such a short tenure we now have a very impressive list of market clients.
“We’ve built the franchise value by being passionate, responsive, and giving the client what they want, such as multiline coverage. And we can build on that,” she concluded.
