A seismic reinsurance shift, but alternative capital outlook uncertain: Hiscox CEO

The global reinsurance market is going through a seismic shift, making it one of the most attractive markets in over a decade, Hiscox Group CEO Aki Hussain said yesterday.

But there remain challenges, not least as for as alternative capital goes, with the outlook uncertain at this time, the CEO explained.

Speaking during his firm’s earnings call yesterday, Hussain said that Hiscox Group is well-positioned.

“We’re facing into one of the most attractive reinsurance markets we’ve seen for over a decade and it’s into this highly attractive market that we are deploying additional capital.

“The reinsurance segment is undergoing a seismic shift, and we’re seeing some of the best rating underwriting conditions we’ve seen in over a decade.

“Demand for US CAT excess-of-loss and global retro remain strong, at a time when alternative capital and some traditional capital is retrenching and we’ve experienced some of that retrenchment ourselves,” Hussain explained.

On the subject of retrenchment in capital, as we reported yesterday the Hiscox ILS business unit experienced strong inflows for the first-half of 2022, but since then has experienced some investor capital outflows.

However the unit managed to come through 2022 with $1.9 billion of assets under management intact, which was available to put to good use at the January renewals.

Hussain continued, “We saw significant inflows into the ILS fund in the first half of last year and we saw moderate outflows in the second half. I would have to say that the outlook for alternative capital in 2023 is uncertain.

“But it’s these sort of factors that will ensure that the current hard market is sustained and it’s into this highly attractive market that we are deploying additional capital, and as a result, at 1/1 renewals we increased our net written premiums by 49%.

“If the current market conditions persist I expect significant significant net growth in the Re & ILS business.”

Joanne Musselle, Chief Underwriting Officer, Hiscox Group provided an update on Hiscox Group as a reinsurance buyer.

She explained, “Overall we have the reinsurance in place to enable us to capture the opportunity that hard market presents. In our nat cat business again, we have secured appropriate capacity for our enhanced 2023 plans.

“Some of the retentions have increased, and there has been some tightening of terms and conditions. For the rest of our portfolio, specialty and casualty, we placed our reinsurance programmes on, or actually slightly below, our budget.”

Given the growth seen at the January 1 renewals and the adjustments to the Hiscox reinsurance program, Musselle highlighted that performance could be a little different.

“How should you think about our reinsurance? What I would say is, in a mean or modest year, you would expect our margins to improve. But on an individual claim event, our claim amount could indeed be higher,” she said.

Hussain summed up by saying that, for Hiscox, “We’re facing into an exciting environment, with a significant and large opportunity ahead and with the infrastructure and team in place our ability to capture that opportunity has only been strengthened.”

Also read:

– Hiscox ILS assets hold at $1.9bn, Re & ILS premiums up 49% at renewals.

– Hiscox launching ESG syndicate with third-party capital target.