Everest’s Izzo: Cedant demand driving fac market to new heights
The US facultative market is having a moment, according to Anthony Izzo, Everest’s global head of fac, as its “nimble” and “bespoke” nature has become “a serious value adder” for cedants needing to transfer risk off of their balance sheets.
“With treaty capacity being restricted and continued firming of terms and conditions, facultative is more in vogue and continues to be a product that is rising in demand,” Izzo told The Insurer TV from the sidelines in Monte Carlo. “It's a good time to be in facultative.”
Everest began its push for growth in the fac market a few years ago when it hired Izzo, hoping to better flex its capabilities in the wake of a changing marketplace.
Izzo said he expects the surge in demand to continue for both fac and treaty in 2024.
“I think there is a demand for risk transfer products. And whether it's a facultative individual risk product, a semi-automatic, an automatic and obligatory session, a hybrid product, or a treaty, the demand is consistent across the board,” the executive said.
Izzo also highlighted the synergistic quality of Everest’s fac teams with its treaty colleagues to match products with cedants.
“When an opportunity comes into Everest that perhaps is not necessarily a traditional treaty opportunity, and not necessarily an individual risk opportunity, we work very closely with our treaty colleagues to make sure that we have the right product for our clients,” said Izzo.
Hybrid products also allow for custom tailoring and innovation, which makes them popular, Izzo said.
“[Hybrid] takes a bit more of a treaty view of those risks, but yet the diligence is a bit different than individual risk review,” Izzo explained.
“It's growing because of the tailored nature of the product and the efficiency that it gives the cedant. We're excited about the opportunities in 2024 for our hybrid teams.”
Discussions at Monte Carlo
That excitement permeated the Rendez-Vous crowd which assembled in Monte Carlo this year, according to Izzo.
While last year, the key topic was the availability of capacity for property treaties in hard market conditions, Izzo said that this year, attendees were more concerned with the longevity of the hard market.
There were also lots of discussions, he said, regarding casualty terms and conditions, ceding commissions and capital coming into the business.
“We raised $1.5bn of incremental capital, and we'd like to deploy that at terms and conditions that meet our criteria.”
Looking forward to 1.1.24, Izzo expects property rates will have to continue to stabilise.
“We need increases on the property side from the treaty and facultative standpoint,” he said.
Additionally, because of development patterns on the casualty side, Izzo said he expects ceding commissions to drop.
“We feel that they have to be decreased one or two points,” he said.
Watch this 6 minute video to hear more about:
- Why the fac market has grown in volume, submission counts and premiums ceded over the last 3 decades
- What makes fac a “serious value adder” for cedents needing to transfer risk of their balance sheets
- Future trends in the hybrid space
- Why ceding commissions might come down a couple of points