There has been “quiet” growth in both the casualty and specialty lines of the insurance industry as Bermuda has matured out of its traditional catastrophe reinsurance focus, said Christian Dunleavy, the group underwriting officer at Aspen Insurance Holdings.

Mr Dunleavy was speaking in a panel on specialty lines on Monday during the first day of the Bermuda Risk Summit 2023.

“The product suite is a lot broader now,” Mr Dunleavy said. “That does not just mean with subsidiaries in other countries writing it, but actually underwritten out of Bermuda.”

Panel moderator Kirsten Beasley, head of office at Willis Towers Watson, asked panellists if they saw specialty lines as a way to absorb volatility in their portfolios.

Mr Dunleavy said he was seeing people going into specialty because they thought it was a better play than natural catastrophe. But he said a lot of the same potential pitfalls impacting a specialty line, such as cyber also impact natural catastrophe, such as a high degree of modelling uncertainty.

He said cyber could be very volatile, and so could other specialty arenas.

He said underwriters needed to make sure they were diversifying their potential sources of profit rather than diversifying their potential sources of losses.

“You have to be ruthlessly disciplined about coming in and out of some of those classes,” Mr Dunleavy said.

One challenge was whether to hire a team of specialist underwriters or a team of generalist underwriters, he said.

“If you hire a big team of specialists, it can be difficult for them to step back and say now is the time to shrink that class,” he said. “I land on the side of more generalist teams who can step in and out of markets.”

MS Reinsurance chief underwriting officer Chris Hayward pointed to cyber insurance as a growing specialty opportunity.

He said the insurance premium for cyber was estimated to be $10 billion in 2022 and could be more than $20 billion in 2025.

His firm is also considering getting into aviation and space.

“We have written a little bit of aviation,” he said. “We will learn that business and whether we want to bring a team of people to write aviation and space or whether we just use it when the market is in the right place for us.”

Kostya Zolotusky, chief executive officer of Itasca Re, said the global regulatory environment for banks is changing rapidly. He predicted that over the next five to seven years, many banks will be exiting a lot of traditional areas, leaving gaps that could be filled by the insurance industry.

“The insurance market is extremely well positioned if it creates the capability to understand those particular areas, transportation, satellites or project finance,” he said.

Mr Zolotusky also saw a lot of opportunity in the aircraft space, already a focus at Itasca Re.

“We had been building up quite a big book in commercial aircraft prior to the pandemic,” he said. He said they sailed through the pandemic without any losses, despite the disruptions to aviation.

To him, diversification meant a diversified book in terms of the types of aircraft, customers and jurisdictions they dealt with.

Seamus Fearon, executive vice-president, credit risk transfer and services, global mortgage group at Arch Capital Group Ltd, said there was was a lot of opportunity in the mortgage insurance specialty area.

“The mortgage reinsurance space has been very successful for Arch,” he added.

The Bermuda Risk Summit 2023 ended yesterday, with more than 400 people in attendance over the three-day event.