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Ukraine losses 'concentrated among few carriers'

A small pool of carriers are likely to bear the bulk of the insured burden of Russia’s war against Ukraine, analysts at JMP Securities said

Losses arising from Russia’s war against Ukraine are likely to be concentrated among a small pool of carriers, analysts at JMP Securities warned.

The analysts said exposures would be focused on niche classes of business and so would be concentrated among a limited number of re/insurers. 

“The Russia-Ukraine conflict will likely generate a significant amount of insured losses when all is said and done, but due to the niche nature of the exposed lines of business (eg, aviation war, trade credit, political violence) the losses are unlikely to be evenly distributed and the timing by which companies will record the losses remains unclear,” JMP Securities’ analysts said.

Some losses are expected to be announced in the upcoming first-quarter results, but JMP Securities expects more as the year progresses.

Insured losses arising from the Russian invasion of Ukraine could range from $13.05bn to $23bn, according to Property Claim Services (PCS).

JMP Securities said pricing trends will be a key focus of investors at the first-quarter results. 

“Our recent meetings in Bermuda revealed that the moderation in the pace of rate increases observed in late 2021 has seemingly abated, leading us to wonder if this cycle may go into extra innings,” the analysts said.

At present, excess and surplus (E&S) lines remain among the tightest in the market, with recent market data suggesting E&S markets are continuing to see strong growth, driven by a combination of sustained increases in submissions, exposures and pricing.

E&S lines are expected to see some of the strongest growth and margin improvement trends within the commercial lines sector for the foreseeable future, the analysts added. 

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