On the front foot
Kathleen Reardon, chief executive of Hiscox Re & ILS, explains how the firm has reacted to harder market conditions and positioned itself for growth.
What is the current state of the reinsurance and insurance markets?
The current state of the market is strong. It is the first time in my career that I have seen all reinsurance classes of business experiencing rate improvements simultaneously. How long will it last? The conditions that created this environment remain, such as capital constraints, climate change, geopolitical instability and inflationary pressures. On top of all that, there is a hostile loss environment. In the first half of the year, the industry has been impacted by some record severe convective storms in the US and some devastating losses internationally with the earthquake in Turkey and Cyclone Gabrielle in New Zealand. More recently, we have had the Hawaiian wildfires. All these factors have driven demand for reinsurance.
Where are you finding growth opportunities in the market currently?
When you get the right rate for risk, you can step back and look at your entire portfolio and the products you offer. We have retained our appetite for property catastrophe products, where demand is strong. During the pandemic, we stopped writing mortgage and surety, but we are getting back into those lines as conditions have improved. In specialty lines, our appetite remains strong in areas including marine, energy, aviation, terror and cyber – all classes we have offered before.
We have a clear strategy for each of the regions in our various lines of business and over the past year our goal has been to grow our footprint in property catastrophe. We don't just take a blanket approach, however – each territory has its own unique factors.
What is the current state of the ILS market?
The ILS market is still rebalancing. Some investors are on the sidelines because of several years of heightened loss activity and the impact of macroeconomic conditions on other parts of their portfolios. They are waiting to see whether rate momentum is sustained. Other investors are more opportunistic and ready to invest.
For Hiscox, it is an opportunity to lean in on our key strengths – our three-pronged capital strategy. We have offered a quota share strategy for over 15 years and we are in year 10 of our Hiscox ILS Fund strategy. This year we deployed more net capital and welcomed more quota share partners both at 1.1 and mid-year.
What are your outlook and goals for Hiscox Re & ILS for the rest of 2023 and 2024?
The future is bright for Hiscox Re & ILS, we have very healthy rate conditions across all lines of business and the portfolio is in good health. We entered the hard market early at the end of last year on a strong footing because our team had already addressed the loss trend and taken decisive action to rebalance our portfolio and adjust attachment points. We were able to deploy incremental capital to grow our exposure, and improved the quality of our book. And during the first half of 2023 we increased our net written premium by 18 percent year on year. We want to be a leader and continue to be there for our clients, that is our goal.