Reinstatement premiums offset lack of organic growth opportunities
The majority of carriers in our coverage universe grew their books during the year, with the expansion largely driven by reinstatement premiums and back-up covers following the third quarter catastrophes.
This was most evident at Bermuda-based carriers, as they were the most impacted by the catastrophes due to their heavy exposure to property cat business.
Top line growth at P&C (re)insurers on the island was fuelled by reinstatement premiums in the third quarter, while Q4 growth was driven by demand from cedants for back-up reinsurance cover in an otherwise typically quiet quarter for reinsurance premiums.
Another factor was M&A. This was the case at Arch, whose numbers reflected the addition of the United Guaranty mortgage business, while growth at Axis was boosted by the acquisition of Novae.
M&A also boosted the top line at some specialty carriers, with Argo's acquisition of Ariel Re in February 2017 lifting volumes in the firm's international segment. Meanwhile, Markel's portfolio was inflated by business written through Program Services, a fee-based fronting business acquired in November as a part of its State National takeover.
Across the Atlantic, Londoners targeted different opportunities as top line movements contrasted in 2017.
Beazley continued to expand its cyber book in the US and internationally, highlighting a rising demand for the cover. The carrier has partnered with Munich Re to offer specialised cyber products for the world's largest enterprises.
Hiscox has continued to migrate away from its traditional London market and reinsurance focus, with the firm targeting growth in its non-Lloyd's retail business. Lancashire reported a decrease in gross written premiums as it scaled back in all of its segments due to the soft rating environment.
Inadequately priced business also drove down P&C premiums at Swiss Re, which reduced participation or exited accounts where it could not get the rate adjustments or terms and conditions it deemed appropriate.
Meanwhile, Hannover Re and Everest Re both posted strong year-on-year top line increases for their P&C reinsurance divisions.
Hannover Re's growth was fuelled by more structured reinsurance business in North America and Europe. At Everest Re, much of the increase stemmed from casualty, non-US property, mortgage and other credit-related business.
Munich Re's non-life reinsurance premiums were flat as organic growth and new business was offset by deliberate withdrawals from unprofitable business, with the firm reporting reductions in treaty shares across all lines of business and regions.