The U.S casualty reinsurance market has experienced strong growth over the last few years, which has largely been driven by quota share business, according to Steve Levy, President and Chief Executive Officer (CEO) of Munich Re U.S’s Reinsurance Division.
Levy explained that U.S casualty insurers are increasingly relying on reinsurance to support their growth and capital positions, which has helped to stabilise reinsurance market conditions with modest firming experienced at the latest 1/1 cycle following 2017’s heavy catastrophe losses.
“We definitely saw some improvements for the 1/1 renewals,” said Levy. “Last year’s cat events, along with concerns about deteriorating experience for liability lines certainly served to put a floor at expiring for casualty reinsurance.”
Concurrently, property and other short-tail lines reinsurers have shown an increased appetite for casualty business as they look to diversify their books and overcome challenging market conditions.
Much of the recent growth in casualty reinsurance has been driven by quota share business as clients try to support their own growth and capital, while demand for excess reinsurance has remained relatively stable.
Despite the steady growth exhibited in the U.S casualty market, Levy also maintained that innovation will continue to play a critical role for re/insurers as they try to keep up with the market’s changing landscape.
For Munich Re, this has entailed investing in understanding emerging risks, such as climate change, and developing private market solutions for specific perils, such as floods, as well as developing enhanced data analytics capabilities and more advanced risk modelling approaches.