This week has seen a swath of reinsurance firms posting their H1 2024 results – including Conduit Re, PartnerRe, and SCOR – underscoring how multiple mid-sized catastrophe losses have not offset the overall strength of the property and casualty (P&C) reinsurance market.
Craig Darling, in his role as Executive Vice President & Head of Acrisure Re’s Florida office, has witnessed various conditions in the reinsurance market, both on the underwriting and broking sides. His current role focuses on managing Acrisure Re’s strategic capital and critical cat business, primarily handling coastal business from Massachusetts to Texas. This role allows him to leverage insights to assist in managing global reinsurers and strategic investments, ensuring continuity and revenue cohesion.
Acrisure Re’s business model is designed for substantial and sustainable growth, exemplified by its creation of a “Critical Cat” center of excellence within Acrisure Re’s North America platform. Darling noted that his responsibilities also encompass managing Florida operations and contributing to the firm’s strategic direction and growth as a partner.
What are the pressing issues in the P&C reinsurance market in Florida today?
The P&C reinsurance sector in Florida has undergone significant changes. Key factors driving these changes include frequent hurricane losses and long-overdue regulatory tort reform, according to Darling. “In recent years, we have observed a high frequency of hurricane events and significant levels of fraud through the assignment of benefits, exacerbated by one-way attorney fees that have severely impacted the re/insurance industry.
“The management of this business in Florida has been contentious, with inflated claims adjusting through the assignment of benefits involving roofers and HVAC contractors, and attorneys benefiting from excessive fees without bad faith.”
The Florida market is in a transitional phase. Trading conditions have improved significantly, but remain susceptible to changes based on natural events like hurricane landfalls and severe convective storm activity. “The near-miss of Hurricane Idalia softened the global reinsurance marketplace, resulting in better outcomes for all stakeholders taking on Florida risks,” Darling said.
However, he added, homeowner costs have been dramatically high in recent years. Global reinsurance markets have now recorded record earnings due to elevated rates and a much-improved legal environment in Florida. Just a few years ago, property critical cat risks were largely avoided by most reinsurers, while casualty risks were more preferred.
Understanding the ebb and flow within market cycles
“The ‘ebb and flow’ within market cycles are apparent,” he noted, “with current trends indicating greater interest in property reinsurance as casualty reinsurance faces more pressures from trends and developments.”
Identifying some of the key dynamics influencing the current environment, he highlighted the critical role of prevailing high interest rates for insurance companies. “With such high costs of capital, it’s a challenging time to be a reinsurance buyer,” he remarked. However, he noted that the absence of significant hurricane losses in 2023 has led to more favorable conditions for property reinsurance, and high returns available in the market have sustained the current seller’s market.
“While capacity has poured into the global reinsurance market, alternative and less risky returns can be found outside the critical cat space through other less risky yield options,” he observed. “This also means that reinsurance brokers are expending significant effort to identify the most commercial and competitive capital available for global reinsurance programs.”
What’s next for the team at Acrisure Re?
With so many varied market conditions at play, it’s a busy period for Darling and his team at Acrisure Re, but he emphasized that their primary focus for 2024 is to continue executing their growth strategy.
“We are significantly expanding our revenue, efficiently managing resources, and concentrating on strategic investments to acquire new clients and sustain our growth trajectory,” he affirmed. “In our office, we’re referring to this as our ‘Secretariat year.’
“Our growth has already surpassed last year’s achievements and far exceeds where we were two years ago, but we aim to push even further. This ambition is driven by our successful growth trajectory thus far.”
