Dean Klisura, president and CEO of reinsurance broker Guy Carpenter, said two specific areas of growth in the second quarter of 2023 are the insurance-linked securities (ILS) market and global retrocession, with capital inflows expected to help increase activity.
While capital has been an issue, especially for the retrocession market, Klisura noted yesterday on parent company Marsh McLennan’s Q2 2023 earnings call that things have been improving.
Greater capital and investor interest in reinsurance helps support a strong pipeline of cat bond issuance so far in 2023, while also helping to improve conditions on the retrocession front.
Commenting on Guy Carpenter’s organic growth of 11% in the quarter and 10% in the first half of 2023, Klisura pointed to strong growth in the reinsurer’s international and global specialty business segments.
“We’re very pleased with our underlying growth of 11% in the quarter and 10% in the first half of the year, and we’re seeing strong growth in all of our regions, especially international and global specialty,” Klisura said.
Adding that, on the return, “Global Specialties plays an important role in the return, capital markets, capital markets based in London and globally, and there are some capital challenges.
“Nevertheless, we have seen some capital inflows into the market. Our global team of professionals has continued to develop and perform well despite the difficult market conditions.”
He went on to say that Guy Carpenter continues to successfully win new business, saying, “Growth in new business continues to accelerate for Guy Carpenter. Some of that comes from all the talent we’ve hired, and we’re winning in the market. We’re seeing very strong demand in this market for our analytics platform, which we believe is the best in the market.”
“Demand for our advice and solutions remains strong. In a challenging market environment where capital remains constrained, our clients have really experienced and seen a drive for quality. When reinsurers come up with very challenging terms and conditions, you know, you want to work with the best.”
Moving on to the insurance-linked securities (ILS) activity of GC Securities, Guy Carpenter’s capital markets and ILS specialist arm, Klisura noted that strong market conditions have also benefited the broker.
“I also think Guy Carpenter Securities is taking off in the market.
“In the first half of the year, we did more than 20 cat bond transactions, with some new ILS capital entering the market.
“We’ve done ILS builds for major customers, so I think there’s real momentum in the business globally, and of course the market is still a tailwind.”
Klisura explicitly acknowledged how new capital inflows from the capital markets helped Guy Carpenter service its clients in the first half and resulted in better terms on the catastrophe bond and retrocession side of the market.
However, chief executive Guy Carpenter doesn’t see immediate weakness in the market, saying: “There isn’t enough new capital in the market to change the trajectory of the pricing environment.”