Marc Grandisson, President and Chief Executive Officer (CEO) of Arch Capital Group, has said that overall market conditions in the firm’s property and casualty (P&C) business seems relatively unchanged from last-quarter.
Furthermore, Grandisson believes that additional rate increases are needed to provide a more adequate margin of safety and broader growth opportunities going forward.
Speaking during the company’s Q3 2018 earnings call, Grandisson stated that growth in property came out of the, mostly London, catastrophe-exposed business that went through substantial rate changes and increases as a result of the 2017 events in areas like Texas and the Caribbean.
“So, this is most of where the increase came from on the insurance side,” said Grandisson. “On the reinsurance side, very similar story. You’ll see that the property also grew dramatically.”
Commenting, within the context of property, on the expectations going into the key January 2019 renewals, Grandisson said, “It’s still early, right? We’re a couple of months before the renewal of January 1st, and the market is still flushed with capital. So, there’s a couple of things going on there that brings a lot of dynamic as we get towards 1/1.”
Grandisson added that, based on the results and losses that they’ve seen over the last two to three years, the firm expects there to be at least some price increase to recognise the fact that the short-term average is probably not going in the favour of the insurance and reinsurance companies.
Concerning casualty lines, Grandisson said, “We’re not a big casualty reinsurance player. What you see in our casualty segment is not at all the general liability or the traditional casualty reinsurance.
“We still feel this is too competitive for our own taste. The fact that people want to buy more reinsurance might indicate to me that there’s a willingness and a desire to share or at least to de-emphasize the risk that is inherent in their portfolio.
“So we’ll be very cautious in the way we are going about running that business,” concluded Grandisson.
The Bermudian insurer and reinsurer recently posted its financial results for the third-quarter of 2018, reporting net income of $217 million compared with a net loss in the same period last year, supported by solid results within its reinsurance segment.
As noted by Grandisson and other industry executives in recent times, there’s a belief that further rate increases are needed in order to support continued profitability in the highly competitive and saturated P&C sector.