“Bottoming” was a popular description of the reinsurance market at midyear industry conferences, but there is less consensus around questions of whether this “near bottom” signals rational behavior and precisely when reinsurers will kick off the bottom.Executive SummaryReinsurance executives agree that the market is “bumping along the bottom,” but there’s no clear consensus on what might jar a strong upward bounce. They used even more colorful phrases like “thunderingly naïve” and “self-delusional” when asked if competitors are behaving rationally.
“It’s a tough market,” said Constantine (Dinos) Iordanou, chair and chief executive officer of Arch Capital Group Ltd., during the Standard & Poor’s Global Ratings 2016 Insurance Conference in New York in early June. But he prefaced the assessment by noting that he no longer has to wear a helmet and bulletproof vest to work.
“On a scale of 1 to 10, with 10 being a great market and one being a lousy market, maybe we’re a 2 or 3. But I see some signs of bottoming in a lot of the sectors,” he said. “Clearly, the reinsurance market is facing headwinds, and there’s nothing we can do about Mr. Market other than manage as best as we can.”