67 WALL STREET, New York - June 6, 2014 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors
Companies include: Arch Capital Group Ltd. (ACGL) and many more.
In the following excerpt from the Insurance Report, the Director, Chairman, President and CEO of Arch Capital Group Ltd. (ACGL) discusses company strategy and the outlook for this vital industry:
TWST: You talked about some of the business segments where you see the best opportunities. Which segment or segments represent the biggest challenge for you, and how are you adjusting your strategy accordingly?
Mr. Iordanou: The biggest challenge is in our reinsurance sector because the reinsurance marketplace is becoming more competitive. It has become more competitive on the property cat area with the influx of new capacity. This is hedge funds and/or pension funds that have entered the space - so more capacity, same demand, pricing has come under pressure. And also, the cedents see that their underlying business is improving, and so they're looking to negotiate better terms with reinsurers.
With premium rates declining in reinsurance, we're becoming more careful, and we don't see much organic growth in the reinsurance area. Probably, you will see less property cat business written by us and less traditional reinsurance. Having said that, we're looking for other avenues to grow. We're looking for avenues to grow our life reinsurance mortality business. We're trying to grow our reinsurance into the mortgage insurance space, etc. So even where we're challenged, we're looking for different sectors where we can find profitability.
TWST: What's happening in the rate environment, and in which segments are you seeing the best rate growth?
Mr. Iordanou: The rate environment is best in primary insurance, the E&S market and smaller accounts. That's where we see the best opportunities in the small accounts: binding authority business, program business, etc. As you get to larger accounts, where the premium revenue is significant, you see more and more competition, and of course, less pricing. Having said that, we view the insurance marketplace to be in a good place. This is the direct marketplace, and most of the pressure on pricing, we see on the reinsurance side.
TWST: Can you comment on the strength of your balance sheet at this point, and are there any areas that you are working to improve?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
- Investment & Company Information