Rate is adequate in most lines we’re in, it’s too soon to backpedal: Dale Underwriting CEO

Duncan Dale, founder and Chief Executive Officer (CEO) of Dale Underwriting Partners, told Reinsurance News that rating is adequate in most of the lines the specialist re/insurance provider operates in, with little room to go backwards as the carrier focuses on developing the right opportunities.

Last week, we spoke with Dale at the 66th annual meeting of the reinsurance industry in Monte Carlo, to gauge his thoughts on the property and casualty markets, the company’s deal with CVC, and what 2025 holds for the firm.

At RVS 2024, a focus for Dale Underwriting was updating people on the plans for the business, given that it’s now been more than a year since the deal with CVC, a global private markets manager, was signed.

As a reminder, the deal enables CVC funds to invest in Dale Underwriting to support growth and also acquire a majority stake in the business.

“The CVC deal has been very well received,” said Dale. “CVC are very, very well respected, extremely experienced and knowledgeable in financial services, in insurance and in Lloyd’s, so a very well-respected investor. So, it’s great for us as a business to have them backing the team and I’ve been delighted so far.”

A combination of skills and experience from CVC’s standpoint of how to build the business and where to invest in infrastructure, tech and people, and how to make it the most attractive platform for talent, has been ideal, explained Dale, adding that it’s about leveraging all of that with where the opportunities are in the market.

Just prior to this year’s Monte Carlo event, Dale Underwriting announced its entry into the international professional indemnity space, and the CEO highlighted this as an area of growth and one that is very complimentary to the business.

“They lead a lot of the business that they write, so it’s a good opportunity. They’ve been a very good underwriting team that has stuck together for a long period of time and produced good results,” he said.

Outside of the new team, Dale explained that “pretty much every line we’re in, we feel that the rating is adequate,” and stressed that there’s not a lot of room to go backwards.

“Particularly, I’d say in the casualty lines, to our mind, there’s not a margin that feels excessive. In other shorter tail lines, you can see the margin quicker and take a view of adequacy of pricing there with a little bit more certainty. Those lines clearly with a longer tail, where inflation is more impactful, it’s tougher to predict what the ultimate margin will be,” said Dale.

The US casualty space was described by one of the ratings agencies as the elephant in the room at RVS 2024, and the deterioration in prior years was evident throughout half-year reporting.

Dale told Reinsurance News that he expects this trend to continue.

“Typically, it’s not all dealt with in one go. I think it’s to be expected, actually, as when that business was priced, it was priced with a lower expectation of inflation than has emerged,” he said.

The conversation then turned to the property insurance and reinsurance markets, and commenting on the latter, Dale highlighted the fact both demand and capacity are on the rise.

“What we haven’t seen is a significant influx of new capital into new vehicles. This is a good thing for those that are in it, and it should preserve rating integrity. From our perspective, we’re not rewarded by writing more premium, we’re rewarded by the results of the business,” said Dale.

“So, like everybody else, we are not in control of the market but we just see that it is too soon to backpedal from rate adequacy on cat reinsurance when it might have had one good year, maybe it has two good years, but remember it had six bad years prior to that,” he added.

Throughout 2023, reinsurers made some significant adjustments to structures, lifting attachment points to move away from frequency losses, which, alongside more rate, helped firms produce strong results in 2023 and the first half of 2024.

Attachment points and reinsurers’ willingness to lower these were debated heavily at RVS 2024, but the reality is that discipline is expected to persist as reinsurers are not eager to reverse the gains made last year.

Dale agrees with this, telling Reinsurance News that on the reinsurance side, attachments will probably stay where they are.

“On the retro side, it’s debatable. If you look at the loss picture, there’s been somewhat of a redistribution over the last year or two around how much stays with the primary cedents, how much ends up in the reinsurance market, and how much of that goes into retro.

“So, the second tier of that, the reinsurance tier, is at a better return, which puts more pressure on cedents, which ultimately puts more pressure on regulators and customers to price the business at a level that is sustainable against increasing attachments,” said Dale.

“I don’t see at that second-tier reinsurance level much appetite for taking more of that lower loss activity on. Retro really depends on the individual relationships and the development of the book and the history of the relationship, I would say,” added Dale.

In terms of the primary property market, Dale noted the migration into the E&S market, driven by the fact the primary admitted market can’t get the rate or doesn’t have the appetite.

“If the primary market is not fully served by the admitted market, it increasingly ends up in the E&S space. And we’ve definitely seen that trend. We’re seeing business in the E&S market from territories that we’ve never seen before. That tells us something about the primary markets’ ability to charge the right rate,” explained Dale.

To end, Dale commented on what 2025 holds for the company.

“2025 is really executing on the plan, which is, as mentioned, bringing the new team on board, continuing to focus on the business lines we’re in. I don’t think we’ll be in any way aggressively pursuing other business lines. We’ll keep our eyes and ears to the ground, and if there are opportunities then we’ll explore those.

“We’ve got a strong level of growth, so will be focused on making sure that we’re developing the opportunities that are right for us and developing the right margin,” said Dale.

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