Analysts at Goldman Sachs still expected reinsurance broking businesses to report double-digit premium growth in the second quarter of 2023, as well as strong results in retail property and casualty (P&C) globally.
In a recent report, analysts discuss pricing and exposure growth for insurance and reinsurance brokers in the Americas.
As well as anticipating strong premium growth of around 27% of annual revenues in Q2 2023 and the aforementioned robust performance in retail P&C, analysts warn that employee benefits deceleration quarter-over-quarter is expected to be a drag to overall organic growth “as wage increases and employment growth decelerate modestly but remain strong.”
Expectations are that the segment will see organic acceleration in E&S markets on the back of higher property submission flow and the fact pricing in the key property renewal season will drive an acceleration in premium growth.
“Overall, pricing and exposures remain healthy and continue to provide for above-average organic growth levels compared to long-term averages,” say analysts.
Ultimately, Goldman Sachs analysts expect P&C renewal premium change to accelerate in Q2 2023 when compared with Q2 2022 in the aggregate, driven mostly by a shift to property business in the quarter, alongside a resilient economic backdrop.
“How this favorable dynamic translates into overall organic growth is mixed, however, primarily due to business mix differences, varying degrees of economic headwinds, and an estimated slowdown in more transactional business that falls outside of RPC,” say analysts.
In terms of pricing, analysts expect commercial pricing to accelerate modestly driven primarily by property coverages.
Property pricing is expected to accelerate in Q2 2023 as the impact of higher property catastrophe reinsurance pricing, anywhere from 20-40%, filters into primary pricing models, partially offset by continued pressure on workers’ compensation and public D&O pricing.
