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MultiStrat CUO urges discipline for casualty ILS as capital grows
MultiStrat’s Kier James said the segment is relying on gradual reserve strengthening, while noting commercial auto remains challenging even as rate rises continue.
MultiStrat’s Chief Underwriting Officer, Kier James, told Artemis that the casualty insurance-linked securities, or ILS, market needs to show discipline through market cycles to keep attracting capital as the sector grows.
James said casualty ILS has gained momentum and expanded in recent years, supported by institutional investors seeking longer-duration yield, which helped drive a surge in casualty-oriented structures. He warned that as capacity increases and alternative capital enters at higher volumes, maintaining underwriting and market discipline will be a key challenge.
He pointed to reserve strengthening as one factor helping support discipline, describing it as gradual in some casualty lines MultiStrat has traditionally participated in. James said certain lines have remained difficult, with commercial auto singled out as a “strange” case where abundant capacity is entering even with relatively poor performance, though rate rises are continuing.
James added that the market appears to be moving toward rate adequacy but is not there yet, and he cited ongoing issues including lost development on back years from 2020 onward. He said casualty sidecars have emerged as a primary growth catalyst within casualty ILS, and that reserve strengthening and rate trends should help keep market participants disciplined across other lines as well.