Hyperion X, the data and analytics specialist unit of the Hyperion Insurance Group, has reported pricing improvements of between 0% and 20% at the July renewal.
Following a conversation with Hyperion X executives David Flandro and Nick Griffiths, Morgan Stanley noted that magnitude of rate improvement in July was below the level of observed in June 1st where rates improved by 26.2% on average.
However, analysts chalked this up to the more differentiated nature of the July renewal.
Ultimately, much of the policies renewing in June cover Florida-based risks, while July 1st has a more widespread territorial scope with policies renewing in continental US, Latin America, Australia and Europe.
Hyperion X also said it expects to see a continuation of recent trends, such as the arrival of new start-ups in the insurance space, equity raises, and contingent capital deals in reinsurance and retrocession.
As of July 1, the insurance industry has seen a second wave of sizeable rate improvements in retrocession, leading buyers to give more thought to pricing acceptability.
Reinsurers are therefore left with a few options such as reshaping of their portfolio, higher deductibles, shifts towards proportional agreements or reductions retrocession placements, Morgan Stanley noted.
Hyperion X also observed changes in the availability and use of ILS collateral as low returns and trapped collateral, together with COVID-19 uncertainties, have cause the industry to respond with a reduction in the number of multi-year deals and structuring.
As far as loss creep related to the pandemic is concerned, Hyperion X expects losses to continue to develop over the longer term.
While the event is still ongoing, legal disputes could, in the end, take time to emerge and settle, possibly with a comparative tail to examples like asbestos.
Morgan Stanley expects the January renewal to yield further rate improvements, although fragmented dynamics are likely.
Reinsurance capacity might not be significantly different, although selective capital deployment might lead to fragmentation.