We don’t believe it’s a soft market, most classes we write more than adequately priced: Lancashire CEO

Insurance market conditions remain favourable with most lines of business well priced, and while rates have come down from recent highs, Alex Maloney, CEO of Bermuda-based insurer and reinsurer Lancashire, has said after seven years of aggregate rate change, you don’t transition to a soft market in six months.

Speaking recently during earnings call, executives at the firm discussed insurance and reinsurance market conditions, including rates and growth.

“The insurance market conditions remain favorable, and most lines fundamentally are well priced,” said Maloney. “As we have talked about before, after many years of rate increases, we are now seeing a more competitive market. This isn’t in the form of new capital entering the market, rather, it’s existing players looking to deploy more.”

Maloney went on to note that while there is clearly more capital in the industry, it tends to be more disciplined capital, which in turn does not change Lancashire’s strategy for disciplined growth.

“As I’ve said many times before, we lead with underwriting, and we will continue to grow above rate, while the cycle is supportive of the strong returns for our investors,” he added.

Expanding on rates, in his opening remarks, Group Deputy Chief Underwriting Officer (CUO), Matthew Narbett, noted that Lancashire is “only seeing the early phases of a softening market at portfolio level,” but, importantly, both terms and conditions and attachment points are broadly holding steady.

In light of Narbett’s comment, CEO Maloney was questioned on how far rates are from being inadequate.

“Firstly, you don’t go from a market where you’ve had seven years of aggregate rate change to a soft market in six months, that just doesn’t happen,” he said. “So, we don’t believe it is a soft market, and our comment is very kind of macro for our underwriting portfolio. We believe most classes of business that we underwrite are more than adequately priced.”

Of course, this doesn’t mean that there’s not inadequately priced business in the market, with Maloney noting that there are some areas Lancashire is pretty negative on.

“So, it’s not to say every single piece of business that the market writes is more than adequate, and no one should worry about discipline as rates come off. Look, we’ll continue to underwrite the cycle, that’s our primary job. But in general, we are not panicking about where the market is after minimal negative rate movement after seven years of compound rate change,” said Maloney.