The April 1 renewal activity saw more capacity and optionality for buyers, specific to class of business, geography, performance, strategy and scale. The reinsurance industry has reached a record traditional capital high of USD655 billion. thanks to strong reinsurer results in 2023 and 2024. Many reinsurers are expecting attractive underwriting results and double-digit ROEs in 2025, assuming natural catastrophe losses stay within their 2025 budgets.
News & Insights
Gallagher Re 1st View: Finding the Path
We issue this publication at the key renewal seasons — 1 January, 1 April, 1 July — to deliver the very first view on current market conditions in the reinsurance industry.
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Growth and shareholder returns
Reinsurers are eager for growth but are tempering stakeholder expectations regarding the extent of growth achievable in 2025. There is a noticeable trend of increased dividends and share buybacks as reinsurers address demands to utilize excess capital effectively.
Primary market conditions and catastrophe events
Primary companies have experienced varied fortunes over the past two years, influenced by localized losses and portfolio remediation efforts. The California wildfires serve as a poignant reminder of insurance's critical role in rebuilding lives and economies. These events raise questions about secondary perils and the necessary oversight for efficient market functioning.
Regional insights: Japan
Japan's headline rate changes indicate accelerated softening compared to major international renewals. Historical high catastrophe pricing post-2018 and 2019 typhoons has led to favorable conditions for buyers in 2024. Reinsurers' strong growth desire across various lines contributed to this positive movement.
Specialty markets and future outlook
In specialty markets, the settlement of Ukraine/Russian aircraft leasing losses has prompted reserve increases among specialty (re)insurers. The global reinsurance market is expected to continue its differentiated approach to risk-adjusted rate reductions, focusing on maintaining profitable accounts while addressing loss-making ones.
Conclusion
The pressure on reinsurers to demonstrate profitable capital deployment will intensify unless reinsurance demand increases. Reinsurers face choices between enhancing shareholder returns through dividends and buybacks or pursuing growth via mergers and acquisitions. While smaller acquisitions are gaining momentum, larger-scale M&A in the reinsurance sector remains a possibility.
