Reinsurers face a test over whether they can hold onto pricing discipline in specialty lines as they see abundant capital and softening property catastrophe rates, industry executives said at the Rendez-Vous de Septembre in Monte Carlo while speaking to AM Best TV.

Neil Eckert, chief executive of Bermudian-based Conduit Re, said specialty business posed conflicts ahead of the January renewals.

“You’ve got top-down masses of capital and a softening market, and then bottom up in specialty, you’ve had three very big events in the last five years,” Mr Eckert said.

He pointed to the collapse of Baltimore’s Francis Scott Key Bridge, which he said could generate insured losses of between $1.3 billion and $2.7 billion. He also mentioned potentially $4 billion of losses from political violence and terrorism, alongside uncertainty over Ukraine-related claims.

“Some of those claims are working their way through the system,” he said. “How the leaders actually address that and how the clients respond to people that will be paying big claims in the future is going to be probably the issue of the year-end.”

Mr Eckert said Conduit Re aimed to protect its margin and balance sheet rather than pursue future growth in its property book. The company is increasing the share of excess-of-loss business in its property treaty portfolio, with the long-term aim of reaching 50 per cent.

Doug Howat, chief underwriting officer of Convex, said uncertainty over US casualty reserves was a key consideration for re/insurers.

Convex has kept its American casualty exposure relatively modest since its 2019 launch, he said, growing it gradually over the past two years while keeping conservative line sizes and monitoring retentions. The insurer has also avoided some sectors, including pharmaceuticals.

Mr Howat said the market had once been concerned that casualty business written from 2014 to 2019 would need stronger reserves. However, the concern now is more recent underwriting years.

“People are starting to talk about whether actually 2020 to 2024 are the years that they still need to be concerned about,” he said.

For Convex, he said, this meant selecting the right re/insurance partners, including companies with a record of pricing business successfully through the market cycle.

Ryan Mather, CEO of Ariel Re, said cyber is another class where underwriting judgment had to compensate.

Cyber insurance had evolved and was affected by new technology available to criminals, he said. But the industry still lacked enough data to know what its most severe potential losses might be.

“We understand roughly what happens, but no one can predict what the one-in-100 or one-in-1,000 is for cyber at this stage,” Mr Mather said.