The report covers several areas, including risk appetite, catastrophe losses, underwriting performance, reserve development, and the full-year outlook.
Key findings from the report include a noticeable shift towards international market growth, with clear actions taken by line of business during mid-year renewals as rate changes impacted margins.
Additionally, softer accident years from 2014 to 2019 have led to some reserve strengthening, reflecting greater prudence in loss trend estimates among insurers. Howden Re’s analysis indicates that while greater solvency has led to increased confidence, caution remains, particularly in the natural catastrophe (nat-cat) market.
The report also highlights an improvement in technical earnings, driven by higher pricing and more selective risk management. However, rate increases have begun to moderate as the premium mix shifts.
According to Howden Re, this trend was observed across the property and casualty sectors, with property experiencing headwinds and casualty seeing mid to high single-digit rate increases above loss cost trends.
The reinsurance market landscape continues to evolve, with higher retention rates reflecting the current environment. Howden Re points out that reinsurance structures could be further optimized to better address the increasing frequency of natural catastrophe losses.
For instance, the restructuring of a significant existing quota share treaty contributed to an increase in property lines for some insurers.
In terms of business growth, property and casualty lines saw focused, targeted expansion during the first half of 2024. Howden Re notes that natural catastrophe losses remained elevated, particularly in the United States, where higher cat loss ratios were reported on average.
However, underwriting improvements were driven by positive prior-year development and relatively flat nat-cat losses, with the industry experiencing favorable calendar-year reserve developments due to a reduction in both frequency and severity of claims.
Investment and underwriting results continued to show growth through the first half of 2024, though overall composite capital remained roughly flat, mainly due to dividend payouts.
Howden Re’s report underscores the continued momentum in economic value added (EVA), particularly for reinsurers, who have outperformed insurers in recent periods. Reinsurers have been able to successfully deploy capital in the extended hard market, generating strong risk-adjusted returns.
Howden Re cautions that the industry should not become complacent, as risk premia remain heightened. The report emphasizes the importance of vigilant risk and capital allocation to maintain stability and resilience in the market.
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