Property catastrophe constraints to continue into 1/1: IGI's Jabsheh

Property catastrophe reinsurance capacity will continue to be constrained when the market kicks off renewal negotiations in a few weeks, the chief executive of International General Insurance Holdings (IGI) has said.

Waleed Jabsheh said he expects rates to stay “healthy and stable” going into Monte Carlo in September and the Bermuda-based re/insurer would look to capitalise on the market conditions.

“If the loss activity continues appetite will continue to be restrained and market discipline will continue to be to be high. It has to be,” Jabsheh told Insurance Day, adding the first half of the year has already seen above-average catastrophe activity.

“There’s a lot of dislocation continuing on the reinsurance treaty side”, he said. “It’s because of the heavy loss activity we’ve had for several years now and the heavy catastrophe activity we’ve experienced; the market appetite and capacity is not what it used to be and that has transformed into supply and demand issues.”

The property reinsurance market saw a dramatic hardening in January, which many considered to be a particularly difficult renewal period. Average rates on line for US property catastrophe business rose 50%, brokers reported at the time, while European catastrophe business faced steep price increases of 30% on average. Asia and Australia also saw significant hikes.

However, while it remains a hard market, mid-year renewals saw prices start to stabilise as reinsurers – looking to make the most of the rating environment – made more capacity available.

Jabsheh’s comments came after IGI announced its second-quarter results, which saw the re/insurer’s gross written premiums increase 10.5% to $199.6m and its combined ratio improve 1.4 points to 73.5%.

IGI has already capitalised on the harder property catastrophe market, Jabsheh said, more than doubling its treaty book to around $50m in the first half compared with $20m the previous year.

While the business is still predominantly a direct and facultative player, Jabsheh said he expects its property treaty book to grow to about 10% of its overall portfolio this year, up from 5% historically. “We’re starting to see that book represent a more meaningful part of our overall portfolio,” he added.

He continued: “We’ve seen our capacity become a lot more in demand… business we have been striving to get on for years and years was coming to us without even having to ask. That gives you an idea of where the market is and the change in appetite, especially when it comes to catastrophe exposures.”