Ryan Specialty sees US property chasing reinsurance costs through 2023

The US property insurance market will continue to harden as primary insurers play catch up to spiralling reinsurance costs that are likely to continue through a mid-year renewal season, top officials at US insurance broker and MGA  Ryan Specialty now believe. Casualty lines look strong, but do show individual cases of business flowing back from the E&S market to admitted carriers.

“We expect the hard property market to continue as the effects of reinsurer de-risking of their portfolios at January 1 and April 1 renewals are felt and as insurers approach challenging renewals at 6/1 and 7/1,” Ryan Specialty CEO Tim Turner (pictured) told his company’s first quarter earnings call.

Those conditions will force property cover well beyond what admitted carriers can handle in states and into the excess and surplus market where Ryan does its business, Turner said. “We believe property will continue to be a strong driver of [Ryan’s] growth in 2023,” he said.

Casualty remains strong overall, with higher loss trend, inflation and reserving issues driving more business into the E&S channel overall. Health care, sports & entertainment, higher education and habitational look especially strong.

But casualty is also providing the only cases where some business has reversed course and is now flowing back from the E&S market to be handled by admitted carriers in the individual jurisdictions, Turner noted.

“The overall market is very strong and the flow into E&S is double-digit,” Turner said. Individual headwinds are “outliers, very narrow lines of business,” led by a volatile market for public company D&O, but also including cyber where rate growth has flattened off and even residential construction where some impact of higher interest rates has impeded the market, Turner said.

“Beyond that, there is no let-up whatsoever,” Turner insisted. “We expect the flow of business into the non-admitted markets to be a significant driver of Ryan Specialty growth, more so than rate,” Turner said.

Problems in D&O, fuelled chiefly as the spike in interest rates put paid to M&A, IPOs and other transactions, could clear up by end-Q2, officials suggested.

With 12.9% organic growth in Q1, confidence in property and hope for the ailing D&O segment, Ryan Specialty nudged up the floor of its 2023 organic growth forecast. Ryan is now eyeing a gain of between 10.5% and 13.0%, up from a prior forecast range of 10 to 13%. CFO Jeremiah Bickham said the range had been set wide on account of broad-based macroeconomic uncertainties, few of which had clarified meaningfully over the course of Q1.

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