At the Bermuda Risk Summit, reinsurance ‘royalty’ came together to deliver an update on what 2024 brought for their respective businesses and the wider market – and to share insights into what it will take to succeed going forward.
Looking to the future, Nicolas Papadopoulo, CEO of Arch Capital Group highlighted the “tremendous opportunity” available to the market. He believes the companies best placed to succeed are those able to develop the best insights into their clients and customers, and to utilise that to develop an exceptional customer experience. “I think this is a race that has actually started. And companies that are not able to compete, I think will be underperforming.”
As to what this client insight looks like, he noted that it’s about using risk-based pricing and claims analytics to support the underwriting or claims teams in making the best decision. Leveraging the full potential of computing power, data science and artificial intelligence for decision making at the risk level is the winning combination for the future, he said.
Commenting on “another extraordinary year”, which saw Hiscox Re & ILS deliver an undiscounted combined ratio of 69% COR, Kathleen Reardon, CEO of Hiscox Re & ILS, said there are two main factors behind the strong showing. “It is because we do serve our third-party capital customers, that is a very strong core part of the business offering, and we do that in a couple of ways.
“First, we make sure we have an ever-evolving, expanding product offering. Our cat-bond funding has now been launched for over a year, we joined London Bridge 2 for the first time this January. That also reiterates the importance of Lloyds to our platform. So, it’s just a constant expansion and meeting the capital partners where they want to be met.”
The second factor is the business’s results, she said, which are paying dividends to its capital partners and to Hiscox. Its fee income rose 26% year on year in 20224, and this underscores the conviction and confidence placed in the division by its capital partners and Hiscox. “And this is despite the fact that we had a pretty active cat year,” she said. “So, it really comes down to the to the talent.”
Group president and CEO of Aspen Bermuda Christian Dunleavy shared that 2024 was the third consecutive year of strong results for the firm. Reflecting on what the group has learned from its growth journey, he emphasised the importance of retaining “your humility and your realism. Because as soon as you think you’ve figured it all out, this business is going to kick you in the face.”
Everybody at Aspen has been working hard to continue to build a resilient organization and a resilient balance sheet, he said, and to do the thing that is perhaps toughest about the reinsurance business – “to deal with everybody else's surprises without producing any of your own. And that's not the easiest trick to pull off sometimes in this business but there are ways to do it.”
Climate risk, geopolitical risk and economic risk are among some of the key challenges facing the market today, and they all seem to happening at the same time. With that in mind, while the business is positive about its trajectory, it’s also highly cognizant that the industry can be tricky to navigate and very hard to predict.
“One of the areas we’re focused on is that, over the last three or four years, we’ve been able to bring about US$1.5 billion of third-party capital, alongside our own balance sheet, back into casualty ILS, which is an emerging and interesting area of the business for us. Historically, our ILS has been exclusively cat-focused. In total, now we have about US$2.2 billion of third party capital, alongside our own US$3.3 billion.
“[…] So, the investor appetite is there. We talk a lot about cat in the industry, but casualty usually is the one that really hurts if you get that wrong for the long term. I think the fact there is that much investor interest and support for casualty in what has been a pretty difficult environment out there with litigation trends and legal system abuse and other things, is testament to the fact that the industry continues to really serve the customers well and continues to run towards problems, not away from them. We want to be there. We want to be a part of that.”
Stephen Catlin, executive chairman of Convex Group – which recently secured approval for Lloyd's Syndicate 1984, launching in 2025 – also shared that it had been a good year for the business, which saw it achieve an underwriting profit with a net combined ratio of 89.6%. However, he noted that, “all of us are living in difficult times. There's more uncertainty around the world today than I’ve seen in my lifetime.
“But for us to be too bullish as an industry in the current climate is probably going one step too far,” he said. “We need to have our eyes and ears open wide. We need to see where the problems are. We need to support our clients in the challenges that they have. And if there ever was a time for the industry to pull together and work together, it’s today.”
