Arch Capital Group should expect the next several quarters to continue to show improved underwriting margins, according to Bermuda-based insurer and reinsurer Arch’s Marc Grandisson, Chief Executive Officer and Director.
At Arch’s Q1 2021 earnings call Grandisson noted that it is partially due to the compounding of rate-on-rate increases and the rebalancing of the mix as the market is showing discipline in maintaining its momentum, with the recent catastrophe losses likely to keep an upward pressure on rates.
When asked about his perspective on rate adequacy, he noted that it’s continuing to be really healthy, with 11% being above the loss cost trend which Arch started seeing in last years Q1.
He said: “So we’re in the second round, if you will, of round of rate increases. While we had some rate increases last year and those policies that are currently being renewed and whirring in the first quarter, had another set of rate increases.”
“The fact that we are indeed getting rate-above-loss cost trend, and that also finds its way into our combined ratio on a quarterly basis.
“There’s more to go. We put our first quarter prime last year. There’s another — the first coat of paint this year. We’d be surprised that we have another coat to paint given over the next several quarters. It remains to be seen how much more it will be. But certainly, anything we have at this point in time is — helps improving the margins.”
