In Full: London market ‘finding the bottom’: Noonan
The speed of rate reductions on Lime Street has showed clear signs of slowing this year, according to Validus CEO Ed Noonan...
"We are finding the bottom in London," the executive said in an interview following the release of the (re)insurer's first-quarter results.
"The rate of decreases is slowing. This isn't a turn yet, but it's a stabilisation."
The executive said that there were even some classes now that were seeing some "modest" rate increases, including construction, contingency and aviation products and airports.
Energy has remained "ridiculous", but even there the pace of softening has slowed up, according to Noonan.
Addressing the forthcoming 1 June renewals, Noonan forecast relatively little movement on last year's terms.
"Nothing is falling off a cliff," he said. "It looks like 1 January."
The Insurance Insider reported that rate reductions in the US at 1.1 were typically down by 2.5 percent to 5 percent.
Noonan explained that Validus Re had largely defended its US crop reinsurance book despite its entry into the crop insurance market with the acquisition of top-10 crop primary player Crop Risk Services (CRS) from Archer Daniels Midland, which closed yesterday.
He said that the in-force portfolio - with deals agreed to in late Q1 or early Q2 - was around $70mn down from last year.
But this reflected a sharp drop-off in overall crop reinsurance premiums as RCIS pulled its treaties and Everest's sale of Heartland to CGB saw it assume a greater share of its outward reinsurances.
Validus has steadily broadened its business with the CRS acquisition following the takeover of Western World in 2014, and a newly introduced in-force casualty treaty portfolio that it has built to $86mn.
However, Noonan and CFO Jeff Sangster stressed that Validus would not seek to follow Arch which is looking to secure exposure to legacy via a recently established joint venture Premia Re.
"The problem with legacy is that it hurts your live business because to be good in legacy you have to be aggressive in managing your claims down," he told The Insurance Insider. "So right now we aren't looking at the legacy space."
Sangster added: "I can't think of anyone who has got legacy and live right under one roof."
In March The Insurance Insider revealed that legacy specialist Catalina had retained Barclays Capital to run a strategic process. Bermudian (re)insurers are among the firms likely to be approached.
Noonan also followed up his pugnacious remarks on broker remuneration by clarifying the need to differentiate by intermediary.
"In the interests of fairness, I want to add the observation that not all brokers are alike," he said.
"The two largest brokers have a very serious attention to compliance and internal control around facilities, and have had extensive interaction with Lloyd's and regulators on the issue."
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