Reinsurer capital reached an all-time high of US$715 billion in 2024, supported by strong retained earnings and growth in the insurance-linked securities (ILS) market, according to broker Aon.
The record level of capital contributed to favorable conditions for primary insurers during the April 1 reinsurance renewals.
Aon noted an additional US$7.5 billion in expected US property catastrophe limit at mid-year renewals, up from US$670 billion in 2023. The broker said insurers could benefit from this capital inflow by seeking frequency protections and top-up covers ahead of the next renewal cycle.
George Attard (pictured above), chief executive officer for Asia-Pacific at Aon's Reinsurance Solutions, said the opportunities were particularly relevant for insurers focused on high performance metrics.
Gallagher Re, in its own April 1 renewals report, reported similar trends. The broker said increased reinsurance capacity had opened up more options for buyers depending on their risk class, geographic exposure, performance history, strategy and size.
Investor interest in ILS continued to climb, with capital in that segment hitting a record US$114 billion, according to Gallagher Re’s report. Total market capital rose 5.3% to US$769 billion.
Comparatively, the reinsurance renewal period on Jan. 1 revealed significant trends and outcomes that have shaped the market dynamics.
According to S&P, the 1.1 renewals marked a return to more stable conditions after the challenging environment two years prior. Reinsurers, benefiting from two years of favorable returns, exhibited a greater willingness to deploy capacity. This shift contributed to a more orderly renewal process compared to previous years.
Reinsurers refined their solutions by leveraging detailed cedant data and a clearer understanding of client strategies. This approach led to outcomes tailored to specific classes of business, geographies, and performance metrics, moving away from a one-size-fits-all model.
Non-loss-impacted property catastrophe renewals experienced risk-adjusted rate reductions ranging from 5% to 15%. However, pricing outcomes varied by region, attachment point, and reinsurer perspectives on price adequacy.
Despite January wildfires in Los Angeles that are projected to cost the insurance industry between US$32 billion and US$38 billion, Aon said the losses had limited impact on capacity, pricing or terms for Asia-Pacific renewals.
For US insurers with April 1 renewals, wildfire exposure and prior losses played a role in outcomes. Those with loss-free exposures received rate reductions similar to Jan. 1, while those with recent losses saw stable and orderly renewals.
Aon's report also highlighted a growing catastrophe bond market, with outstanding limits approaching US$50 billion as of the first quarter of 2025. The broker said strong reinsurer performance and relatively modest natural catastrophe losses had resulted in improved pricing at April renewals across the board.
Gallagher Re reported that in the US, property catastrophe rates for loss-free accounts declined by 5% to 15%, while those affected by losses ranged from flat to increases of 15%. US property per risk rates declined by up to 5% for loss-free risks and rose by 5% to 20% for loss-hit accounts.
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