Global insurers and reinsurers reported stronger underwriting performance and capital positions in 2024, according to Howden Re’s full-year earnings overview ahead of the April 1 reinsurance renewals.
The report, compiled by David Flandro (pictured above, left), head of industry analysis and strategic advisory, and Michelle To (pictured above, right), head of business intelligence at Howden Re, outlines shifts in underwriting strategy, reserve development, and exposure growth across various lines of business.
Jan. 1, 2025 renewal activity increased compared to the previous year, although volumes remained below those recorded at Jan. 1, 2024. Renewal dynamics also changed, with less emphasis on price increases as a driver of growth.
According to To, pricing is no longer providing the same momentum. She said carriers are now generating growth primarily through increased exposure, although overall exposure remains below long-term averages.
The data shows that this pattern is uneven across different classes of business. In liability lines, for example, premium growth is now outpacing rate changes.
Carrier earnings calls throughout the year highlighted rising catastrophe loss expectations, with losses driven by severe convective storms, wildfires, and events traditionally classified as secondary perils.
These perils, increasingly viewed as primary, have contributed more than US$100 billion in losses annually for five consecutive years.
Flandro noted that underwriting performance in 2024 exceeded the average results from 2019 to 2023. Combined ratios improved by approximately 3.6 percentage points across the board.
He also emphasized that reinsurance purchasing decisions remain a key factor in performance, with consistent patterns observed across a wide range of carriers.
In 2024, the insurance-linked securities (ILS) market experienced notable growth and activity, further improving the segment. The ILS market's capacity reached a record $107 billion by the end of 2024, driven by retained earnings and new capital inflows.
New ILS issuance was estimated at US$17.2 billion in 2024, exceeding the previous record of nearly US$16 billion set in 2023. The 144A natural catastrophe bond market also surpassed US$45 billion in capacity by year-end.
The ILS market is expected to maintain its growth trajectory, with projections indicating the market could exceed $50 billion in outstanding debt.
Looking forward, secondary perils are expected to continue influencing results. Flandro pointed to the California wildfire season as a potential contributor to further loss development. He said the "loss-gap" issue, especially related to the Los Angeles wildfires, has become a major topic.
The potential loss gap from these events alone could range between $60 billion and $90 billion. He added that the difficulty in securing coverage for certain events is becoming a global trend.
The report identifies reserve development – particularly in liability lines – as a critical area of focus. Flandro and To segmented reserve trends into those developing favorably and those that are not.
Liability reserves are showing signs of deficiency, while areas such as workers’ compensation, short-tail, and specialty lines are balancing out the impact. The duration of this trend remains uncertain.
Despite the reserve challenges, To said the overall impact on carrier book values in 2024 was positive. Underwriting results and investment income contributed to capital growth, even after accounting for dividend payments and share buybacks. This increase in capital has supported higher levels of reinsurance capacity on programs.
Since 2022, Flandro and To have observed what they describe as the strongest phase of economic value creation for the insurance industry since 2007. While market conditions are beginning to shift, they said most lines of business remain historically favorable.
Flandro added that future top-line growth will depend more on exposure than pricing alone. Innovation will be required, he said, adding that while underwriting conditions remain favorable, there are still opportunities for value creation.
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