The first half of 2022 has been the most volatile period for re/insurer balance sheets since the financial crisis more than ten years ago, according to Head of Analytics at Howden unit HX, David Flandro and Head of Business Intelligence, Michelle To.
The Howden Analytics presentation notes that both composite and dedicated reinsurance capital fell significantly at the half year, with lowered solvency margins and higher premiums to surplus ratios.
According to Howden, catastrophe losses in the first half were below the historical average, with some carriers shifting their portfolio mix to capitalise on opportunities.
Favourable rate changes mean many carriers are better positioned to achieve year-end targets as underwriting expansion becomes more of a possibility.
Though To notes, “We’re right in the middle of hurricane season, so we shouldn’t get too far ahead of ourselves.”
Flandro commented, “Insurance carriers’ strategies are currently highly varied, but that’s what makes a market.”
“Insurance and reinsurance premiums are growing commensurate with price increases. Results year-on-year are mixed, we’ll know more as these accident years develop,” he added.
Reinsurance cessions and retro cessions have stayed relatively stable with just marginal decreases in reinsurance purchases and marginal increases in retro purchases from reinsurers, explains Howden.
Flandro added, “Capital was highly dislocated in the first half; we think more than at any time since the financial crisis. This creates new profitable growth opportunities for those with stronger balance sheets.”
