KBW Forecasts Decline In Specialty Reinsurer Loss Ratios

KBW Forecasts Decline In Specialty Reinsurer Loss Ratios

KBW Forecasts Decline In Specialty Reinsurer Loss Ratios

KBW Forecasts Decline In Specialty Reinsurer Loss Ratios

As they evaluate the market in the wake of Hurricane Ian and in the context of the adverse interest rate environment, analysts at KBW say they anticipate seeing a broad decrease in specialty reinsurers’ core loss ratios year-over-year.

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In light of the effects of these circumstances on numerous business lines, KBW anticipates some core margin volatility for many reinsurers due to significant property losses and changes in the business mix.

The company did add that many specialty lines outside of the catastrophe-exposed industry could still see declining loss ratios due to a lack of major loss activity.


This should help to hold down some core loss ratios more generally, it added, outside of the catastrophe losses from Ian and elsewhere.

KBW Forecasts Decline In Specialty Reinsurer Loss Ratios

Looking ahead to the 2023 renewals, KBW was also positive on the prospects for property catastrophe reinsurance pricing, saying that it expects to see “very optimistic commentary.”

Analysts believe that almost all underwriters, but especially reinsurers and auto insurers, will report significant catastrophe losses stemming primarily from Hurricane Ian, along with Hurricane Fiona, Typhoon Nanmadol, and other smaller losses.

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For commercial lines insurers, they suggest most Q3 written rate increases should be flat or slightly lower sequentially, although premium increases should stay above underlying claim expense growth rates.

KBW analysts expect the biggest rate increases for cyber insurance and catastrophe-exposed property risks, with workers’ compensation rates flat or up modestly.

KBW Forecasts Decline In Specialty Reinsurer Loss Ratios

For personal lines, meanwhile, constrained marketing spending, accelerating earned rate increases, and decelerating used vehicle prices should start lowering core personal auto loss ratios.

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Meanwhile, persistent commercial P&C rate increases and ongoing exposure unit growth sustain at least mid-single-digit organic revenue growth for brokers, KBW says.

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