IGI spies ‘big opportunity’ to grow California property book

By Chris Munro

March 5 - (The Insurer) - IGI Group’s CEO Waleed Jabsheh believes there will be “a big opportunity” for the company to grow its California property book following the recent wildfires, while the executive is also optimistic that recent energy losses will push up pricing in the sector.

Speaking on a call after Bermuda-based IGI reported its Q4 and full-year earnings last week, Jabsheh said the company’s hit from the California wildfires and other risk losses during the period will “be manageable” for the business.

IGI has been steadily building its book of U.S. business in recent years, and the country represented the biggest growth area for the company in 2024.

On the analyst call, Jabsheh said IGI wrote slightly more than $120 million of gross premium in the U.S. last year, a figure he described as “a drop in the ocean of what is almost a $2 trillion market”.

“So there's plenty of room to grow here … with respect to our treaty portfolio (in) our reinsurance segment as well as our short-tail segment,” Jabsheh said.

In an interview with The Insurer, Jabsheh said the U.S. “is a growth area for us”, although he noted that the country’s domestic carriers “are getting a lot more aggressive and hungrier”.

Jabsheh added that “California will be a big opportunity” for IGI.

“It’s either on the E&S or the treaty reinsurance side. It’s one or the other for us. And I think the opportunities will be there.

“From a reinsurance perspective, I don’t think the reinsurance market will have a lot of appetite (for business) unless it’s done properly.

“The difference with the E&S side is that (the wildfires haven’t) been much of a commercial loss. It's been more of a personal lines loss … and what I can tell you from our experience is that the D&F market hasn't been really hit by this,” Jabsheh said.

“The brunt of this is going to be taken by the reinsurance market,” he added.

Beyond those carriers with California exposure on their books, Jabsheh said it is not yet clear what impact the wildfires will have at upcoming reinsurance renewals.

“It's not going to change things dramatically. Yes, maybe rate reductions might come to a halt, and so on and so forth.

“But the scary thing is that you've had $40 billion to $50 billion of cat losses in the first month of the year. And let's say Swiss Re is right and the average cat loss bill now annually is around the $150 billion mark. Well, we've already eaten away at a third of the cat loss bill,” said Jabsheh.

Away from property business in the U.S., Jabsheh also provided an update on IGI’s views on the energy insurance market.

Energy insurance has been a big focus for IGI since its inception in 2001, with Jabsheh on the earnings call describing it as “one of our largest and most important classes”.

On the call, Jabsheh said competitive pressures are increasing in the onshore energy insurance market.

Although rates are holding up a little better within the power segment, Jabsheh noted that competition is intensifying in that sector too as new capacity enters the market.

“Offshore energy, by contrast, has faced several consecutive quarters of decline and continues to be quite challenging,” Jabsheh told analysts.

Speaking to The Insurer, Jabsheh said a spate of losses in the onshore energy market should help stem the downward pricing trend in the sector.

He noted that a few years ago, pricing was going down in the onshore energy market, but several major losses in the U.S. and Europe “completely changed things within a couple of months”.

Jabsheh said the recent onshore energy losses will “hopefully” spur a similar market response.

“It should do,” he said.

“It's a very volatile class of business, and I think these losses alone will eat away at a lot of the margins, if not all of them,” he stated.

However, he said it remains to be seen what the market response will be.

“The downstream market sometimes does things that you don't really comprehend, or cannot understand how to wrap your head around.

“If you went back 15 years from, say, 2021 or 2022, the downstream market only made money like five out of the 20 previous years.

“So when a market generates results like that, you scratch your head and you say, ‘What's not right?’ But it's just that type of market,” said Jabsheh.

The downstream market “had a couple of good years after COVID”, said Jabsheh, but then after heavy losses in 2022, underwriters refocused.

Jabsheh said softening reappeared during the second half of last year, and underwriters became more aggressive.

But he said the losses that have now struck “will hurt” companies writing downstream energy business, and should focus their minds on pushing up pricing in response.