Isherwood was appointed as CEO Reinsurance Americas with effect from 1 April, and regional president Americas as of 14 August.

In his first interview as regional president, Isherwood said that reinsurance market conditions “are getting to a better point but they are not there yet”.

“Talking about the P&C side of the business, we clearly saw that change from January renewals this year through to now where rates, terms and conditions etc have been moving up reasonably fast,” he told this publication.

“April was a watershed point. That was really just after the whole Covid topic was starting. Some of the wordings, terms and conditions around that were starting to get implemented but not fully. That really picked up through May, June and into July. I expect that acceleration to continue.”

Isherwood provided three factors that will drive this acceleration.

The first is Covid itself. Isherwood noted the extremely wide range of estimates for losses from the pandemic. “But you have got clearly a big, big loss that was never costed for,” he said.

Secondly, a steady stream of natural catastrophe losses has struck around the world in recent years.

“We have had a couple of years of japan problems back in 2018 and 2019, but hopefully not into this year,” Isherwood said. “You look at Australia, that’s given quite a lot of pleasure to reinsurers the past coupe of years, and I say that rather tongue in cheek. And here in the US, there have been wildfires, a new word derecho that was at least one I didn’t know before, and then a recent hurricane as well, which looks on the lower end but is still TBD in terms of what size that will be.

“So a lot of loss activity.”

Thirdly, on top of that is the low yield environment.

“That means if you are very honest about how you economically price the business you have to sort of forget the asset side of the balance sheet and treat things much more like short tail lines,” Isherwood said.

“So those three things coming together I really believe provide an inflection point or a backdrop to a continued hardening of this marketplace, which is more than required.”

Despite the positive trend of hardening rates, the executive believes there is still a long way to go.

The casualty market, for example, has been a considerable source of pain in recent years on both the insurance and reinsurance side, including for Swiss Re.

Isherwood noted that excess casualty policies have become more like primary or buffer layers in recent years because attachment points have not changed much while severity has soared.

He said the median cost of the top 50 bodily injury awards over the last few years has doubled from $28mn to $54mn.

“So that is a casualty cat kind of event,” he said. “You have got a softening, you clearly have got loss cost trends that are supernormal and then you have got this low interest rate environment. All those coming together just mean you need to price casualty lines pretty much as if they are short tail lines these days.”

He added: “We need to see much more continued progress over the next few years. You look at the fundamental economics and there is a long, long way to go still. Until we are in those lower end 90s combined ratios, we are nowhere near.”