ILS and retrocession were growth areas for Guy Carpenter in Q2: CEO Klisura

For reinsurance broker Guy Carpenter two areas of specific growth during the second-quarter of 2023 were the insurance-linked securities (ILS) market and global retrocession, with capital inflows seen to help activity increase, according to President and CEO Dean Klisura.

While capital has been an issue, especially for the retrocession market, Klisura noted yesterday during the Q2 2023 earnings call for parent company Marsh McLennan that conditions have been improving.

The greater interest from capital and investors in reinsurance has helped in supporting a strong pipeline of catastrophe bond issuance in 2023 so far, while also helping to improve conditions on the retrocession side.

Commenting on Guy Carpenter’s organic growth of 11% for the quarter and 10% for the first-half of 2023, Klisura noted strong growth in the reinsurance brokers International and Global Specialties units.

“We’re very pleased with our 11% underlying growth in the quarter, 10% for the first half of the year, we’ve seen strong growth across all of our regions, in particular, internationally and Global Specialties,” Klisura said.

Adding that, on retrocession, “Global Specialties plays deeply in the retrocession, in the capital market, based in London and globally and there’s been some capital challenges.

“Despite that, we’ve seen some capital inflow into the marketplace. Despite market conditions, our Global Specialties team continues to grow and perform impressively.”

He went on to say that Guy Carpenter continues to successfully win new business, saying, “New business across Guy Carpenter continues to accelerate. Some of that’s from all the talent that we hired, we’re winning in the marketplace. We’re seeing very strong demand in this marketplace for our analytics platform, which we think is the best in the marketplace.

“Demand for our advice and solutions remains strong. Our clients are, really experiencing and seeing that flight to quality, in a challenging market environment where capital is still constrained. Where reinsurers are driving really challenging terms and conditions, you know, you want to be with the best.”

Moving on to speak about the insurance-linked securities (ILS) activities undertaken by Guy Carpenter’s capital markets and ILS specialist unit GC Securities, Klisura noted the strong market conditions has also benefited the broker.

“I think, also, Guy Carpenter Securities is differentiating in the marketplace.

“We did over 20 cat bond deals in the first half of the year, with some of that new ILS capital coming into the marketplace.

“We’ve done ILS structuring for key clients and so, I think there’s real momentum in the business, globally and of course the market continues to be a tailwind.”

Klisura is clearly acknowledging how the fresh capital inflows that came in from capital market sources have helped Guy Carpenter service its clients through the first-half, and resulted in better conditions on the catastrophe bond and retrocession sides of the market.

But, the Guy Carpenter CEO does not feel softening is immediately ahead, saying, “There’s not enough new capital in the marketplace to change the trajectory of the pricing environment.”