According to Jim Williamson, EVP, Group Chief Operating Officer, after an impressive year of taking rates and improving terms and conditions (T&Cs), global insurer and reinsurer Everest expects property market conditions to improve next year and potentially Will remain as usual till 2025. , and head of reinsurance.
As the reinsurance industry prepares to meet in Monte Carlo for the 65th edition of Rendez-vous de Septiembre (RVS), we spoke to Everest’s Williamson about the likely focus of talks at the event, conditions in the property and casualty markets and of. Stringent terms and conditions.
In the property reinsurance market, Williamson noted an “incredible year of rate taking and terms and conditions improvements,” which really started to take hold late last year.
“1.1 was incredibly chaotic. I think Everest was in a very deep position because we reduced exposure in 2022, so we had dry capacity that we were able to deploy and really take advantage of opportunities in January, April and mid-year; We were really able to get those renovations done,” Williamson said. “The rate level on each of those renewals puts us in an area where the expected return is about the same as what we saw on 1.1, which is fantastic.”
While 2023 is, for the most part, done and dusted for Everest, talks for next year will undoubtedly be heating up at RVS, and reinsurers are understandably bullish about property reinsurance market conditions going forward.
“Our expectation on the property front for January 1st is that we expect to see a continued rise in rates, obviously not to the magnitude that we have seen over the past 12-18 months, but we think it will be meaningful. Will be,” Williamson said.
“We think conditions have the potential to last through 2024, and now we are starting to think maybe even 2025, given all the factors. So, very favorable on that front, and again, we had dry powder, incremental capacity added, and we’re deploying that with our core customers,” he said.
In the context of the casualty reinsurance market, Williamson highlighted Everest’s meaningful growth as the company weathers a wave of casualty reform with its clients in recent years.
“I think we’ve partnered with some of the best underwriters in the industry, and that’s worked well for us. Rate fixing has slowed down, and what we are looking at is to ensure that the rate remains in line with the trend,” he said. “So far, Knock Wood, we are at that place, it is doing what it is. But we watch it carefully.”
Williamson also commented on the fact that commissions in the casualty area have begun to decline this year, explaining that it is a trend that Everest hopes to continue in a modest but meaningful way.
Williamson said, ultimately, that Everest “still seems to have legs in that market, even if some of the froth is coming off.”
As Williamson emphasized, as well as meaningful rate increases, particularly in the property catastrophe sector, terms and conditions have been a focus for reinsurers throughout 2023, and in particular the move away from frequency events as sellers of protection Want to participate higher in the tower.
Whether it was floods in Europe, record levels of severe infectious storms in the US, or devastating wildfires in Hawaii and Canada, this year’s natural disaster events have shown why reinsurers have moved away from so-called secondary perils.
In light of this, Williamson told Reinsurance News that he expects the focus of the conversation at RVS to be about panel quality and capacity availability, as he thinks the market has now realized that it needs to comply with terms and conditions. where it should be in context.
“I think the hard work is done for the most part in 2023. Obviously, there are some exceptions and they will be cleaned up, but I think we are in a good position. I do not see any mistake on the terms and conditions front. I guess we’re staying where we are.
“So, I think it’s going to be for us anyway mostly about sitting down with our fundamentals in a really constructive way and figuring out how we can maximize capacity deployment for those customers so that they have the best possible reinsurance panels, Williamson said.
“I feel that in the last few years, there has been a flight towards quality in the industry, wherever possible. I think there was a slight delay on 1.1 because people were desperate to fill their schedules, and so they were willing to accept a slight drop in panel quality.
“This will benefit Everest as we are a preferred market. I think our customers want to do more with us and we have the resources, especially given our capital growth, to fill those panels and help them move away from some of the partners, if I do say so. Had a long time, maybe they don’t want to be on their panel. So, I think it will be very creative.”
Everest raised approximately $1.5 billion ahead of a mid-2023 renewal to take advantage of the difficult market growth opportunity.
In past tough market cycles, Everest would have been one of the many companies that took a pay raise to capitalize on the opportunity, but this time it hasn’t, and increases have been few and far between.
However, for Everest, Williamson explained that the Bermuda-based company was “confident enough that this market had legs and that we were well positioned to successfully complete a deployment, that we had the courage to go ahead and do so.” Was.
“I think it involves a lot of work with our customers to understand their needs and make sure that they have a need that we can meet productively and at great economics for us. And so, this We got the conviction that we needed to move forward.