Article img

Insider in Full: Hard market uplift clear despite IFRS complications in Q3 results season

The ongoing introduction of IFRS 17 reporting is complicating comparative results analysis at the Q3 mark, but London market carriers and global continentals are continuing to benefit from a hard property market...

However, slowing rates in other key lines such as cyber were a point of conversation, while isolated challenges also showed up at some results, despite the generally positive conditions.

Among the trends that emerged are the following:

1. Cat losses have largely not been a factor, despite lots of talk of an ‘active year’

The London market carriers disclosed less detail on cat losses than continental peers, but the general theme of the quarter was that cat losses were within budget.

Despite a relatively high level of losses for the year – Aon data put nine-month losses at $88bn, or 17% higher than the long-term average, albeit below 2020-2022 levels – the range of cat events has (largely) favoured London market and continental carriers.

Severe convective storms (SCS) accounted for roughly 70% of global insured losses between January and September this year, with many remaining with US domestic insurers. This reflects both upon the major reset of reinsurance attachment points in 2023, the disappearance of aggregate reinsurance and London market carriers paring back in cat-exposed segments within binders/D&F.

However, international losses such as Italian storms and Hawaiian fires have triggered reinsurance responses, and for the year-to-date phase, some carriers noted that they were fully booked up to expected cat loss activity.

Scor’s cat loss ratio for the quarter actually came in above budget at 13.3 points on the combined ratio, vs 10 budgeted, RBC analyst Derald Goh wrote. However, on a nine-month basis, it is one point below budget.

In contrast, both Lancashire and Conduit said they had not had any material impacts from cat events this year.
2. Rate rises driving significant top-line growth in property

With the transition to IFRS17, we are not representing London market top-line results side by side, as some disclosed adjusted gross written premium, while others moved to report insurance contract written premium.

But across the four listed peers, all individually recorded solid year-on-year growth. The uplift was significant in the case of still-building-out Conduit (up 50% over the nine-month period) and Lancashire (up 23% over a smaller base vs Hiscox and Beazley on single-digit growth). 

Lancashire’s $119mn special dividend also pointed to the rewards of hard market earned income, as analysts at RBC said the return would still allow it to “comfortably support its growth ambition leveraging the hard market and still leave scope for further capital returns in our view”.

Segmental analysis showed that surging property premium figures were largely driving top-line growth. For Hiscox, there was steeper net retained premium income vs its headline top-line growth, as changes to its retro and third-party capital support also determine the direction of its harder-market portfolio.

Among the continentals, negative currency impacts subdued Hannover Re’s Q3 top-line figure, but the group reported moderate growth.

The impact of Swiss Re remaining on a US GAAP reporting basis means that its combined ratio result is not directly comparable to its other three peers, who are reporting on a discounted basis that would imply, all else being equal, lower combined ratios versus GAAP reporting standards.

While executive commentary on property was almost universally positive, other pockets of business remain more under watch.

Swiss Re’s casualty segment posted an underwriting loss, pointing to the theme of social inflation upon prior-year US portfolios, which we have noted raises the question of whether its stance on the segment will prove to be an outlier or one that is a signpost for other peers to follow.


3. Cyber rates have heavily moderated

As market participants are watching carefully for signs of a broader slowdown to the commercial hard market, cyber rates (as well as financial lines) have been in the spotlight.

One positive sign for investors is that Beazley said it had not seen an uptick in claims frequency, despite an increase in ransomware attacks. 

CEO Adrian Cox noted that although Beazley is "comfortable" with the pricing environment in cyber, growth is more difficult. 

He said the main opportunity for cyber remains outside North America, which is where Beazley is concentrating its investments.




Insurance Insider delivers global wholesale, specialty, and (re)insurance Intelligence that enables you to act first. Redeem your complimentary 14-day trial for more premium content from Insurance Insider. 

See more
See less
Share fluctuations
Ryan Specialty
Arch Capital
Marsh & McLennan
Brown & Brown
Swiss Re
See more
See less
Upcoming events