Arch Capital’s CEO, Marc Grandisson, discussed the company’s outlook during the Q3 2023 earnings call, predicting that the ongoing hard market in the insurance industry will continue to support profitable growth into 2024.
“As we near the end of 2023 and look ahead to 2024, I believe that although the dynamics may shift, this hard market will continue to support profitable growth.”
Grandisson identified three key acts that have shaped the current market dynamics. In the first act, the hard market began in primary liability insurance in 2019, and the industry experienced an unusual two-year pause in claims activity due to the global pandemic.
The second act saw the emergence of Hurricane Ian as a significant character, forcing property reinsurers to adjust their pricing and risk strategies. Additionally, the cost of capital increased, prompting the industry to meet new investor expectations.
“We expect this third act of the extended hard market, already one of the longest in memory, to persist until the industry’s reserving issues are resolved and until capital rates generate positive results. Arch is well positioned to capitalize on this operating environment,” Grandisson said.
“As new hard market underwriting opportunities arise, our incredibly nimble reinsurance group allows us to grow more quickly and significantly than in our insurance group and is therefore where we are most likely to deploy capital first.”
Market trends indicate a reinsurance-driven general liability hard market, and Arch is poised to take decisive action in this sector, Grandisson concluded.
