Acrisure Re’s CEO: Regional carriers hit hardest by last year’s renewal chaos
US regional carriers, from single-state up to super-regional, were hit hardest by the hike in rates at last year’s chaotic 1.1 renewals, says Simon Hedley, CEO of Acrisure Re.
While the sector is more orderly compared to this time last year, difficult conversations remain in the minds of some carriers after what was termed a “chaotic” and “difficult” renewal season in 2022.
“Looking at critical property cat, we went into a renewal season last year with certain expectations on behalf of the reinsurers, and expectations we had to manage carefully on behalf of the cedants,” Hedley explained.
“That largely came to pass in terms of a further reset of retentions and terms and conditions, not just price – but I think the most difficult conversations that took place, from a US perspective, were really around the regional companies.
“In many ways they got hit hardest because they were the sort of classic relationship – cedants relying on the long-term relationships they had with core reinsurers, and a number of those reinsurers really just retrenched income in 2023.”
Hedley claims the industry must examine how regional carriers ended up in a position where the impact of a tough renewal season was so severe.
“They got to that place because, in many ways, they were treated very well by those reinsurers for a long period of time, so the reset button was severe,” he explained. “It would have been better to have a more gradual transition into where we got to last year.”
However, he does not predict that the issues last year will lead to any big changes this year.
“We see expansion of key reinsurers who are fit and able, who have capital, have risk appetite, and those which are still participating but have been holding back more than others. I don't see that kind of dynamic changing dramatically as we go into this.”
Away from property cat…
Hedley also spoke to The Insurer TV about the differences between the natural catastrophe sector and the casualty sector, claiming a major difference for casualty is the US commercial excess and umbrella market.
While the market has seen some deterioration in recent years, Hedley argues for the “sophisticated” cedant there has been a huge amount of re-underwriting, adjustment of risk appetite in certain areas, managing limits, or coming into renewals with a very different attitude in comparison to before 2020.
Another major talking point at this year’s Monte Carlo Rendez-Vous is the high levels of talent dislocation in the reinsurance broking space. Hedley offered some insights into how Acrisure has handled this.
“We have to be, and we strive to be, somewhere where people want to work. We have a particular culture and we protect that very carefully,” he explained.
"We've been able to build our talent over the last few years the way we wanted to build it. Last year we employed a huge amount of people and we will continue to do that. But we're doing it in a planned, methodical way.”
He said Acrisure has differentiated itself from other brokers through being “innovative around transactions and thinking deeply about what the client really needs, as well as being thoughtful and strategic around execution and having a deep, understanding relationship with the market.”
Watch the eight-minute video with Acrisure Re’s Simon Hedley to hear about the following topics:
- Regional carriers were hit hardest by renewal season last year due to their long-term relationships with reinsurers
- The casualty market has the US commercial E&S market
- Acrisure’s workplace environment and avoiding talent dislocation