Ariel Re: Euro property cat rates must move higherto make expansion tenable

Ariel Re has the capacity to grow in Europe, but more rate is needed in property catastrophe reinsurance across the board before the continent becomes an attractive region for further expansion, according to Tom Orton, assistant vice president of property reinsurance.

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Speaking to The Insurer alongside Giovanni Maccioni, Ariel Re’s vice president of property reinsurance, Orton
underlined that he sees no area in Europe where property reinsurance rates would go down.


“We could be bigger in Europe if we wanted to. But we’ve chosen not to because we don’t think rates are there yet. We think there’s still a way to go and still some bespoke private layers to come,” said Orton.


While he anticipated that all rates would go up, he suggested that loss-impacted territories should come first.

Tom Orton

assistant vice president, property reinsurance at Ariel Re

Italy was the first location Orton pointed to after its record~$2bn hail loss bill as well as significant losses from floods in June. France also requires further rate, Orton said, adding that Germany is another region where nat cat losses have highlighted the inadequacy of current pricing.

This comes after E+S Rück CEO Michael Pickel noted that the company had seen considerable claims expenditure from German summer storms, adding that these types of storms had affected its book as retrocession had not kicked in.

Europe and the broader non-US space still offer expansion opportunities for Ariel Re, particularly for “mature markets”, Maccioni continued. This includes Canada, Western Europe, Australia, New Zealand and Japan, where he said Ariel Re would continue to try to deploy large limits.

US SCS opportunity

Ariel Re’s primary area of focus continues to be the US market, said to take up ~80 percent of the reinsurer’s business. One area of interest for Ariel Re is severe convective storms (SCS), particularly on a per-occurrence basis.

Gallagher Re said US SCS losses totalled $54bn for the first nine months of 2023, the first time the annual total for the peril has topped $50bn.

“The aggregate of all the losses [is] going to drive up prices. Retentions need to be higher, and aggregates will almost certainly all be gone,” predicted Orton.

Maccioni explained how the expectation of increased SCS-related rates underpins the reinsurer’s interest, although this interest still relies on it getting comfortable with modelling it.

2024 25% premium growth

Last month The Insurer revealed that Ariel Re has had its business plan approved by Lloyd’s to grow premium by around 25 percent in 2024. It is understood to be securing backing from new and existing investors to support the expansion as it targets attractive opportunities at 1 January, especially in cat reinsurance.

While no specific stamp capacity number was given for 2024, Orton noted that 70-80 percent of Ariel Re’s book is property cat reinsurance — with around 80 percent of that also US. 

Giovanni Maccioni

vice president, property reinsurance at Ariel Re

Expanding on the capital raise, Maccioni said that it would give the reinsurer greater flexibility in the US space to interact with clients early and deploy large lines.

But Orton affirmed this opportunity to “go big” was still reliant on the reinsurer remaining prudent on capacity use.

“Our investors are very aware of the reinsurance market. If the rates aren’t there, and the terms aren’t there, they are okay with us not deploying that extra