OdysseyRe’s Overy: Further corrections are needed at 1.1

OdysseyRe’s Carl Overy discusses his first six months as CEO and his outlook for the 1.1 renewals.

Carl Overy was appointed global CEO of Odyssey Reinsurance Company in April 2023. He most recently served as CEO of Odyssey Group’s London market division for the past 15 years, which encompasses both OdysseyRe’s London branch and Newline Group, the international insurance arm of Odyssey Group.

How would you describe the first six months in your new role?

As OdysseyRe’s global CEO, I manage the company’s reinsurance portfolio and underwriting platform operating through five regions: North America, Latin America, EMEA, Asia Pacific and London. In these first six months, I made it a priority to visit as many of our offices as possible, making connections with our local underwriting teams and understanding their portfolios of business. What was immediately apparent is the strength and depth of talent within each of our regions. This, combined with the stability of leadership over the years, has greatly eased my transition. OdysseyRe has truly been built to stand the test of time, and our longevity, underwriting discipline and quality service is a testament to our dedicated, hard-working employees around the world.

It’s a very exciting time for OdysseyRe at the moment. Over the first two quarters of 2023, gross premiums written were just under $2bn, up 13 percent from last year, with growth across all reinsurance divisions. We’re seeing rate increases and improvements across almost all major classes of business, which is much needed given how poorly the reinsurance market has performed in recent years.

Looking ahead to 1.1, what will drive the market and what do you expect to see?

The market has evolved compared to the 1 January 2023 renewal period, and I would say has been relatively orderly since then with greater balance between insurer and reinsurer expectations when it comes to price. The property cat market remains firm, and reinsurers are now being more appropriately compensated for the risk they are assuming, particularly in the US, so any rating action at 1.1 is likely to be far less material than what we have seen recently. Outside the US, further change is necessary, as we often see significant capacity being deployed with very little reward for reinsurers. This, against the backdrop of a number of recent catastrophes, particularly in Europe, suggests that more correction is required at 1.1.

Looking at casualty, we are seeing further deterioration across back years such as 2014-2019. Primary market rates are flattening and reducing materially in areas such as cyber and D&O, and inflation remains relatively high, which will serve to compress underwriting margins despite improvements in terms witnessed this year. Again, this suggests that further corrections are needed at 1.1.

Whether or not this happens will clearly be dependent on cat activity between now and year-end, the influx of any new capacity and the hunger of existing capacity providers.

What more can you tell us about Odyssey?

From my perspective, Odyssey’s culture is one of a kind and stems from our people, many of whom have worked for us for decades, and from our parent company, Fairfax Financial Holdings Limited. We have a clear understanding of our risk appetite and the importance of great customer service both internally and externally. We operate with honesty and integrity, and in a collaborative manner with all our business partners. Diversity has also been an important aspect of our success, and we embrace opportunities to bring in young, diverse and talented individuals to work for us. In fact, we have several educational programmes that provide internships, work-study arrangements and mentoring, all in an effort to present (re)insurance as an incredibly worthy, stable and enjoyable career. Finally, it’s also important we give back when profits are made, and charitable giving is at the heart of Odyssey. Our philanthropic endeavours, including employee-directed campaigns, have enabled us to contribute over $70mn to more than 450 charitable organisations around the world.