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Ariel Re to push for tighter property reinsurance coverage as it eyes growth opportunities

The losses from Hurricane Ian could push investors out of the catastrophe reinsurance market

Lloyd’s re/insurer will be seeking to better define coverage at 1/1 renewals with potential to offer larger line sizes

Ariel Re is pressing for tighter property reinsurance coverage as it looks to unlock new opportunities at the January 1 renewals.

Speaking to Insurance Day, underwriters at the Lloyd’s re/insurer said current market conditions were creating opportunities and that Hurricane Ian’s impact on the market would be felt beyond Florida.

The carrier writes a $500m worldwide portfolio of property reinsurance principally through Lloyd’s syndicate 1910. Its property reinsurance book is weighted 70% towards US business with the remainder comprising mature international markets, such as Canada, Australia, Europe and Japan.

Tom Orton, assistant vice-president, property reinsurance at Ariel Re, said the carrier’s focus at the forthcoming renewals will be on “clarity” of coverage, clearly defining what perils are covered and delineating coverage to clearly defined territories.

“In order to be able to unlock much larger line sizes [for clients], that’s something that we’re going to be focused on,” he said.

In recent years, property reinsurance coverage has become increasingly broad with “everything thrown in”, said Orton.

He added: “We will continue to be quite discerning with our risk selection. So, we’re going to be looking to cherry pick the very best risks.”

With the reinsurance market gathering at Baden-Baden, the Ariel Re underwriters said there could be opportunities for expansion in Europe, where the business is currently “underweight”.

Major reinsurers are talking of considerable additional demand for cover from European cedants. Swiss Re, for instance, has cited an additional €2.5bn of additional capacity required from German cedants alone.

Giovanni Maccioni, vice-president, property reinsurance at Ariel Re said: “There are still pockets of underpriced risk and soft market conditions [in Europe].

“We would like to grow, but at our own terms and price. If the opportunities are there, we are ready to deploy meaningful lines,” he added.

Maccioni said Ariel Re is unlikely to move its risk appetite higher up coverage towers in Europe as rates-on-line are, typically, too low to make it worthwhile.

The underwriters also discussed the impact of Hurricane Ian, which could potentially lead to insured losses in excess of $60bn, on the forthcoming reinsurance renewals.

Maccioni said Ian will have a wide-reaching effect on the global reinsurance market. “It's going to have impacts everywhere – definitely outside Florida, in the US. It will also have an impact elsewhere, such as in Europe.”

He added: “It will have a psychological impact [on the market]. It will have an impact on top of inflation.” 

Orton highlighted the impact on insurance-linked securities investors from trapped capital. With ILS capital locked up as a result of Hurricane Ian, the storm could be the “straw that broke the camel’s back” with many investors “saying they have had enough” of the catastrophe reinsurance market, he said.





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