Steadfast CEO Robert Kelly: Hard Market & Rising Reinsurance Costs Persist

Steadfast CEO Predicts Hard Insurance Market to Persist Amid Rising Reinsurance Costs

The hard insurance market is here to stay as insurers continue to face daunting reinsurance costs, according to Steadfast MD and CEO Robert Kelly. Speaking to analysts, Kelly noted that reinsurance conditions have reached an "incredible crescendo" in recent times, with Steadfast-owned strata specialist CHU seeing reinsurance rates skyrocket from 12% to 32% over the last decade.

Kelly believes insurers will need to keep raising rates in order to achieve the margins they seek, citing the high cost of rebuilding since the pandemic as a key factor behind the need for price hikes. He predicts that insurers will be forced to keep driving prices up over the next two to three years, until rebuilding costs return to normal levels.

Kelly also highlighted the growing role of underwriting agencies in the insurance market, noting that they are becoming increasingly popular among brokers seeking to place businesses that have been turned away by insurers. He predicts that agencies will continue to grow in importance as insurers reposition product lines, and brokers seek greater agility in placing business.

Despite the challenging market conditions, Steadfast's July-December revenue was up 27% to $662.8 million, with brokers delivering 15% GWP growth to $5.6 billion. Kelly expects the business to perform even better in the current half, with $227 million of available capacity to fund future acquisitions.

Published: Wednesday, 1st Mar 2023
Author: Paige Estritori

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Knowledgebase

Insurance Underwriter:
An insurance company, a financial institution that sells insurance.