Marc Grandisson, President and Chief Executive Officer (CEO) of Arch Capital Group, has predicted that pricing trends at the mid-year renewals are likely to remain flat or even decrease, largely due to industry posturing.
Speaking during the company’s Q1 2018 earnings call, Grandisson explained that at the recent April 1 renewals Arch experienced generally stable pricing trends, with some lines slightly down, depending on the layer and type of risk.
Arch expects to see similar results for the June 1 and July 1 renewals, with strong posturing and competition in the industry driving prices down.
Grandisson commented: “June first and July first there’s a lot of renewals taking place. So people are jousting for positioning and arguing their case as we speak, but the early signs are that the price increase is going to somewhat go down.
“So the second derivative is negative to the rate change. It might be still a rate change, but it’s not going to be as good or as healthy as it was at 1/1.”
He added that a broad based market turn was unlikely in the near-term given that there is abundant capital currently available across the market, despite growth exhibited in some niche areas.
The CEO maintained that, while there have been visible rate increases thus far, companies must do more to proactively position themselves in the marketplace and promote a more opportunistic way of thinking.
“As I was saying in the third and fourth quarter,” said Grandisson, “you need rates of 30% to 40% to really start pushing the envelope and to make a significant commitment in capital to property.”