Aon has released its Reinsurance Market Dynamics July 2024 report, which analyzes the marketplace during the June/July 2024 reinsurance renewals, focusing on the Americas, Australia, and New Zealand.
The report indicates that insurers generally experienced positive mid-year renewal outcomes. These outcomes included rate reductions for property catastrophe risk and improvements in terms and coverage.
Despite the competitive reinsurance marketplace, the landscape remains dynamic due to secondary peril losses in property, heightened Atlantic hurricane season forecasts, social inflation, and adverse reserve development in casualty.
Compared to 2023, mid-year capacity for US catastrophe-exposed business was more than sufficient to meet increased demand, with over $10 billion of additional catastrophe limit purchased by US insurers. Renewals on June 1 and July 1 continued the positive momentum from the Jan. 1 and April 1 renewals.
Increased interest from traditional reinsurance and ILS markets resulted in downward pricing pressure for both US nationals and Florida specialist insurers, who saw rate reductions for the first time in three years.
Renewals in Latin America and the Caribbean were also favorable for insurers, with ample capacity to meet demand and risk-adjusted flat to single-digit rate increases. Insurers in Australia and New Zealand experienced stable market conditions, with about 80% of their property catastrophe reinsurance business renewing at mid-year.
The report also highlights that total reinsurance capital reached a new record of $695 billion by the end of Q1 2024, up from $670 billion at year-end 2023. This increase was driven by retained earnings, recovering asset values, and new inflows into the catastrophe bond market.
Aon Securities estimates that overall ILS capital rose to a record $110 billion through the second quarter, up from $108 billion at year-end 2023, with $46 billion of catastrophe bond limit on-risk. For the first time, more than $8 billion of catastrophe bonds were issued in a single quarter.
Reinsurers are generating strong returns by historical standards, with annualized ROE averaging around 20% in the first quarter of the year.
Steve Hofmann (pictured above), co-president of US Reinsurance Solutions at Aon, highlighted the stability of the market and the opportunities that it presents for re/insurers.
“Over the past 18 months, we have advocated for this balance on behalf of our clients by introducing additional risk transfer capacity and launching new technologies to enhance risk assessment and management,” Hofmann said.
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