This week has seen a swathe of reinsurance firms posting their H1 2024 results – among them 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.
In his role as executive vice president & head of Acrisure Re’s Florida office, Craig Darling has seen the reinsurance market through multiple conditions, both on the underwriting and broking side of the fence. Today his role sees him manage Acrisure Re’s strategic capital and the critical cat business, primarily focusing on coastal business from Massachusetts to Texas – which offers him the opportunity to harness those insights to help manage global reinsurers and strategic investments, and ensure continuity and cohesion around revenue.
The reinsurance broker’s business model is designed for substantial and sustainable growth, which can be seen in its creation of a center of excellence known as “Critical Cat” within Acrisure Re’s North America platform. Darling noted that his role also sees him manage the Florida operations of the business as a partner responsible for contributing to the firm’s strategic direction and growth.
The P&C reinsurance sector in Florida has seen “significant changes”. Key factors behind these changes include frequent hurricane losses and long overdue regulatory tort reform, Darling said. “In the last few years, we have seen a frequency of hurricane events and significant levels of fraud through the assignment of benefits, further exacerbated by one-way attorney fees that have crippled the re/insurance industry.
“The handling of this business in the state of Florida has been dubious, caused by permutated claims adjusting through the assignment of benefits with roofers and HVAC contractors, with attorneys benefitting from absorbent fees without bad faith.”
The Florida market is in a transitional phase. Conditions appear to be much improved for trading, but those conditions are fickle based on what Mother Nature will deliver with hurricane landfalls and severe convective storm activity. “The near-miss of Hurricane Idalia softened the global reinsurance marketplace, leading to better results for all Florida risk taking stakeholders,” Darling said.
However, he added, the costs to the homeowner have been very dramatic over the past several years. Global reinsurance markets have now posted record earnings based on the elevated rates and much improved legal climate in Florida. But only a few years ago, property critical cat was a no-go for most reinsurers and casualty was much more favoured.
“The ‘ebb and flow’ within market cycles are evident,” he said, “with current trends showing more interest in property reinsurance as casualty reinsurance faces more trend and development pressure.”
Identifying some of the key dynamics at play behind this present environment, he looked to the “crucial factor” of how high interest rates are and what this means for insurance companies. With the cost of capital so high, it is a bad time to be a buyer of reinsurance. Of course, he added, the lack of significant hurricane losses in 2023 has resulted in more favourable conditions for property reinsurance and the high returns available in the market have maintained the current seller’s market.
“Capacity has flowed into the global reinsurance market, but alternative and less risky returns can be achieved outside of the critical cat space with other less risky yield return options,” he said. “What this also means is that reinsurance brokers are putting huge amounts of energy into working out where they can find the most commercial and competitive capital that can be deployed for global reinsurance programs.”
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 its primary focus for 2024 is to continue executing its growth strategy.
“We are expanding our revenue significantly, efficiently managing our resources while focusing on strategic investments and adding new clients to sustain our growth trajectory,” he said. “In the office, we’re calling it our ‘Secretariat year’.
“Our growth has already taken us lengths ahead of where we were last year, and far more compared to where we were the year before, but we want to stretch even further. This is an ambition, but it is also one driven very much by the way we have been able to grow so far.”
