Brandt, who serves as president, global underwriting for TransRe, highlighted the strong rate increases on primary US casualty business that have fed through to reinsurers writing quota share treaties.
“Those primary rate increases are significant and aren’t coming because there’s a lack of capacity - it’s because there’s a need,” the executive told The ReInsurer.
And even though there has already been significant loss development from the 2013 to 2018 accident years, Brandt predicted “there’s [still] a lot more pain to be realised in those years”.
“Based on instinct, [US casualty is] probably the weakest area of reserves,” Brandt said.
“Reserve levels in the casualty lines are the most problematic for the industry in my opinion.”
Factoring in the close-to zero interest rate environment, Brandt said the need remains for further rate improvements in the casualty market.
“The US casualty market, and the large global casualty market has a lot of need for price. Even though it’s getting it now, it’s going to need a lot more.”
While the casualty market is in the most need of additional pricing improvements, Brandt said, other business lines also require increases.
“We’re in the middle of all kinds of events – a live cat with Covid, and wildfires raging all around in Northern California, a couple of storms in the Gulf. It’s going to be a pretty active market,” Brandt commented on the upcoming reinsurance renewals.
Reinsurance pricing, he said, is going to widely increase at the upcoming renewal, he suggested.
Property reinsurers are having to contend with the tightening in the retro and ILS markets, and then the property catastrophe business that’s placed in January “has largely escaped price increases over the last couple of years”, said Brandt.
“That will be active as well,” the executive stated. “We think it’s going to be a very active market with price uplift.”