Reinsurance pricing at the January 2025 renewal period saw moderate risk-adjusted decreases for property coverage, though the extent of changes varied by region and whether accounts had been affected by prior-year losses, according to insights from Moody’s.
Despite significant global insured catastrophe losses in recent years, reinsurers maintained strong results, aided by higher attachment points for property catastrophe reinsurance. These adjustments improved underwriting outcomes and bolstered capital levels across the sector, ensuring sufficient capacity to meet demand.
Moody’s noted that the upcoming midyear 2025 reinsurance renewals, which focus primarily on the US, will be influenced by large catastrophe events from the past year, particularly Hurricanes Helene and Milton and the Los Angeles wildfires. These events are expected to provide support for reinsurance pricing on US exposures.
Typically, global reinsurers renew between 40% and 60% of their portfolios on January 1, including most European business.
The 1/1 renewals reflected overall stability in contract terms, alongside moderate reductions in rates for property catastrophe reinsurance and retrocession markets, according to a report from Euler ILS Partners.
This trend was particularly notable in regions that did not experience recent losses, including parts of the US, Europe, and Asia-Pacific. Despite some rate decreases, pricing across global and US markets remains near historic highs, supported by stable contract terms and conditions.
Several European-based reinsurers reported premium growth for their reinsurance businesses, reflecting capital deployment in what remains an attractive pricing environment.
Pricing trends across these reinsurers' portfolios varied, ranging from a 2.8% increase at Swiss Re to a 2.1% decline at Hannover Re.
SCOR noted that its nonproportional business experienced a 0.8% pricing decrease, marking the first decline for such renewals since 2017, according to Moody’s.
For US property catastrophe reinsurance, Guy Carpenter reported a 6.2% pricing decrease at the January renewals, marking the first such decline since the end of the previous soft market in 2017.
Moody’s observed that pricing in working layers, which cover more frequent and smaller claims, remained stable, while pricing declined at the higher end of reinsurance programs. This segment, which covers less frequent but larger claims, continued to attract capital, keeping rates at risk-adjusted levels that reinsurers still found viable.
Casualty reinsurance pricing showed mixed results, largely depending on the performance of individual treaties. Gallagher Re reported that European casualty reinsurance rates ranged from flat to down 10% for loss-free accounts and flat to up 10% for loss-impacted accounts.
In the US, general liability pricing varied from a 5% decrease to a 5% increase for loss-free accounts and remained flat to up 10% for loss-impacted accounts. Moody’s noted that ceding commissions remained broadly stable as reinsurers sought to limit additional payments to cedents amid ongoing concerns over social inflation and increasing loss costs.
Attention now turns to the mid-year 2025 renewals, which will focus heavily on US accounts. Many of these have been affected by recent catastrophe losses, including hurricanes and wildfires, leading Moody’s to anticipate stabilization in US property catastrophe reinsurance pricing.
For accounts with significant losses over the past year, the potential for price increases remains substantial.
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