Ripe for opportunity
Louis de Segonzac, CUO for the Americas at MS Reinsurance, says the reinsurer is well placed to capitalize on improved market conditions.
What were the key takeaways from CIAB this year?
A major talking point at last year’s Insurance Leadership Forum, hosted by CIAB, was the state of the property market. This year, discussions centered more around movement within casualty lines. With deteriorating conditions in recent years having impacted balance sheets and the impact of social inflation, with certain US states feeling it more than others, the casualty market is seeing poor performance across the board. I expect that the current environment will likely lead to further market correction, potentially to the same extent as what occurred in property last year.
How do you see the outlook for the reinsurance industry?
As the industry moves away from disruptions caused by geopolitical tensions and economic headwinds, 2024 holds greater promise for the reinsurance sector. In recent weeks, Fitch Ratings has raised its outlook for next year to improving from neutral, as a number of trends are supporting earnings across the sector. These include robust remediation, high price discipline which is driving the hard market, rising reinvestment yields, and strong demand for reinsurance protection.
In comparison to last year, reinsurers expect to see a much more orderly set of renewals at January 2024 as the lessons learned from the previous year’s last-minute authorizations have led to more efficient processes. Nonetheless, the high interest environment as well as capacity constraints are likely to continue to raise rates and retention costs in the near term.
How is MS Reinsurance deploying capacity in the current market?
We started our new journey as MS Reinsurance last year with a new underwriting strategy. We decided to deploy capacity with clients where the overall relationship was well diversified across an entire portfolio. This had led to some tough decisions, but I think those decisions were well understood and even welcomed by many of our clients.
Now, we’re in a position where there is strong demand for reinsurance protection, and our portfolio is shaping up nicely. Clients are increasingly grappling with volatility on the asset side of their businesses, so it makes sense that they will want to smooth some of that volatility on the underwriting side (with reinsurance).
On my team, there are three primary considerations that we focus on. First, we do our best to understand our clients’ needs and strategy. Second, we aim to be easy to do business with – and that means allowing underwriters to make decisions. Thirdly, we have streamlined our platform to be nimble and cost effective. At MS Reinsurance we’re prioritizing these three key areas to make a real difference for our clients’ experience and to build the kind of long-term relationships that best support their financial interests.
How long will current hard market conditions remain?
While inflationary pressures are expected to somewhat ease, there remains a level of uncertainty, and it is likely to remain a key area of interest across the property market. Demand and price deterioration in the past year as well as the ongoing issue of social inflation impacting the casualty side have also greatly increased the likelihood that the hard market will impact property and casualty lines. We can expect the hard market to continue into 2024.
How does MS Reinsurance view the opportunity going into 2024?
Last year marked a turning point in our business as MS Reinsurance reset its strategy and strengthened its team by consolidating our US and Bermuda offices to better service our clients. We are nearing the end of an expansive transformation project, optimizing our platform to effectively leverage the power of automation and data-driven technology, which enables us to deliver tailor-made solutions at competitive rates.
Throughout, we have remained committed to building our business through continued professionalism and with an entrepreneurial approach. In a world of frequent uncertainty, we remain a constant and stable reinsurance partner.