Reinsurer appetite for property catastrophe renewals have increased by 10% to 15%, leading to consistent oversubscription as demand only increased by 5%, a report by global risk and reinsurance specialist Guy Carpenter found.
According to its report, non-loss-impacted property catastrophe renewals also saw notable reductions in the risk-adjusted reinsurance rate at January 1, with the rate reductions ranging from 5% to 15%. The reductions in rates, as well as additional capacity, reflected strong reinsurer appetite, which was driven by several factors, such as 2024 being a profitable year due to projected average returns on equity of 17.3%.
Other factors include the 6.9% increase in total dedicated reinsurance capital, which amounts to $607 billion, continued reinsurer discipline when it comes to property catastrophe program attachment points and pricing, and actions which improved underlying portfolio profitability.
Guy Carpenter CEO and president Dean Klisura (pictured) pointed to the importance of taking a long-term view among reinsurers while continuing their roles as constructive partners for clients.
“Renewal outcomes at year-end reflect reinsurers’ positive property experience over the last two years and casualty portfolios that are well-positioned for future profitability,” said Klisura.
The report also found that reinsurer results have been affected by attachment points as global industry catastrophe losses reached nearly $130 billion in 2024 while the estimated reinsured share of the losses fell to 14%. Meanwhile, loss-impacted layers in the US, Europe, and Canada saw adequate capacity with risk-adjusted rates from flat to an increase of 30%.
The 144A catastrophe bond market continued its robust activity by the end of the year as 67 different catastrophe bonds were brought to the market for $17 billion in limit placed in 2024. Year-end renewals were also completed with varying outcomes despite casualty reinsurance programs being an area of concern for the market.
Proportional casualty structures experienced ceding commissions that were flat to slightly down, but excess of loss general liability and excess/umbrella placements still faced pressure when it comes to treaty terms. With clients providing additional claims, rate, and exposure date, there was an increase in transparency that helped in distinguishing client portfolios and allowed reinsures to be more comfortable with treaty terms.
Meanwhile, the cyber reinsurance market continued to be dynamic and innovative as buyers were exploring a range of blended solutions.
Cedents continued to manage reinsurer partnerships holistically through trading across product lines and treaties, which is important as market conditions still varied across property and casualty lines.
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