1st View: Key Territories

Asia-Pacific (APAC)

Asia Pacific markets were largely spared the high inflation environment seen in Western markets over the last few years, which continued to help drive underlying growth into 2025 in these territories. In the absence of a significant underlying inflationary boost, Asia Pacific markets have had to rely on self-generated growth based on underlying economic activity and GDP. Further stressing the market imbalance, original rates remain relatively low, with strong local competition making it difficult for many companies to obtain often necessary increases in primary rates.

The hard markets of 2023 and 2024 left many Asia Pacific buyers squeezed by rapidly increasing costs of reinsurance far outpacing the underlying growth in their portfolios, leading to an affordability issue in many cases.

Against this background the 1.1.2025 renewals have seen a significant shift in buyers' favor as they have grasped the opportunity to realign the cost of their reinsurance protections to a more affordable level, taking into account their own premium and exposure growth. Compounding the challenge for reinsurers has been the limited demand from primary companies for increased limits at a time when many reinsurers are looking for growth in view of their commitments to increase their Asian portfolios. This has resulted in incumbent leaders striving to maintain their positions by accepting risk-adjusted rate reductions which, together with muted underlying premium growth, have translated into meaningful reductions in monetary spend. Even in the two loss-hit territories renewing at 1.1.2025, Vietnam and Taiwan, post-loss rate increases have been modest and below the expectations reinsurers were seeking prior to the renewal.

These pricing dynamics were seen in the smaller Southeast and North Asia Markets, all of which purchase relatively modest limits by global standards. However, pricing also softened in the much larger Australia and New Zealand markets. The forthcoming April renewals in Japan, which is the largest of all the Asia Pacific markets, will provide a more meaningful test of reinsurers' ability to balance their desire for growth against maintaining the current attractive rating levels.

Europe, Middle East & Asia (EMEA)

After the difficult renewals of 2023 and 2024, where European buyers had to absorb significant changes in their reinsurance protections both in terms of price and retention, with limited room for negotiation with reinsurers, all of them approached the 1.1.2025 renewal season with a determination to achieve better value. Reinsurers' strong results for the 2023 and 2024 underwriting years, allied with more moderate catastrophe losses in Europe impacting reinsurers in 2024, added to buyers' confidence to push for improvements.

A factor for many European insurance companies is the continued strong underlying growth in their portfolios. Europe has experienced ongoing raised inflation both in terms of labor costs and, to a lesser degree, material costs. The impact of this is still working its way through driving premium growth and providing room for risk-adjusted rate reductions but still allowing reinsurers to achieve flat or slight increases in actual premiums.

Austria and Central and Eastern Europe countries suffered natural catastrophe losses in 2024 but other territories, particularly the large French, German, and Italian markets, were largely loss-free other than the late development in some of the 2023 losses. In Turkey, losses from the 2023 Kahramanmaras Earthquake stabilized.

Against this background, reinsurers were seeking growth in Europe, and in many cases offered more capacity as they sought to achieve their growth mandates. The growth came almost exclusively from incumbent reinsurers, in part empowered with ILS-fueled new sidecar capacity. This allowed the increased property catastrophe limits of approximately EUR2B purchased for Europe and an additional EUR 3B in Turkey to be easily absorbed, as reinsurer appetite for more remote top layers was significant.

Conversely, reinsurer appetite for frequency protections, either on an aggregate or occurrence basis, was still muted, though there were signs of flexibility for a few preferred buyers that were able to secure modest amounts of new traditional aggregate cover. Reinsurance capacity for structured frequency protections remained high and increasingly competitive and buyers demonstrated an increased appetite to purchase such protections in addition to their core programs.

Whilst property catastrophe renewals showed a logical uniformity in pricing, property per risk renewals remained very buyer and country specific. Most markets are continuing to see challenging per risk results and in Nordic markets the difficulty of obtaining reasonable results has resulted in a wholesale change in primary markets. Domestic insurers have reduced their capacities and have allowed non-Scandinavian (London and Europe) underwriters to enter the market. It will be interesting to see whether this approach will be limited to Scandinavia or whether this may spread to other European countries struggling to obtain acceptable margins on their large commercial and industrial accounts.

With an excess of reinsurance capacity, buyers were able to keep their coverage unchanged, though there is an increased concern from reinsurers seeking more information on strikes, riots and civil commotion exposures, heightened by the unexpected New Caledonia losses impacting the French market.

For all casualty business in Europe there was ample capacity driven by strong reinsurer appetite for growth. Reinsurers' main concerns were largely unchanged being PFAS (per- and polyfluoroalkyl substances, also known as 'forever chemicals'), US liability exposure, and excess auto liability. And while, to date, social inflation has been a US phenomenon, some reinsurers expressed concerns about signs of it emerging in the EU.

United States

Reinsurers' desire to write more US business in a healthy rate environment, combined with strong prior year results after hard yards were achieved on retentions and structure over the last two renewal cycles, resulted in a relatively orderly renewal across multiple lines.

In property catastrophe, reinsurers were working off a more stable baseline. Losses from Hurricanes Milton and Helene were not meaningful enough to erode reinsurer returns resulting in an increased appetite for US property catastrophe business at 1.1.2025, which was evidenced with additional capacity to support core clients.

Buyers' demand remained largely stable, having achieved their desired balance between economic inflation, cost, and a desire to grow.

While there were no meaningful changes to purchasing strategies, some buyers did explore coverages, such as share limit catastrophe aggregate coverage towards the top of programs, demonstrating the willingness of reinsurers to be more flexible in their outlook for the right clients.

Loss-free programs generally experienced risk-adjusted single digit decreases on average, compared with single-digit increases in 2024; loss-impacted programs were more dependent on individual account circumstances and experienced a wider range of outcomes but on average renewed with single to low double-digit increases, compared with +10% to +50% the year before.

In the per risk market, concerns around frequency-driven loss activity meant that supply remained constrained at 1.1.2025, in spite of positive rate movements over the past few years, with only a few reinsurers looking to grow in this segment. Loss-free programs generally renewed flat to +10%, while loss-impacted renewals averaged increases of +10% to +20% with wide variability.

In casualty, underlying profitability in loss trends remained complicated, and for this renewal in particular, there was consternation around the profitability of the more recent accident years 2021-2023.

Reinsurers were focused on market trends as well as actions taken by cedants to mitigate their risk. Buyers continued to take significant action on original portfolios to improve the profitability outlook on their own books, both from an underwriting perspective and a claims management perspective.

Where data helped demonstrate the impact of these changes in a clear and positive light, cedants found support from reinsurers looking to grow in capacity with stable pricing.

The broad range of financial lines products can be broadly divided into US public D&O, transactional liability and other. For most cedants, the goal was to hold the line on terms and capacity.

Public D&O-weighted treaty terms were under pressure again this year and, to minimize economic changes, coverage restrictions were introduced. There were early signs of very favorable development in policy years 2021-2023, however.

Many transactional liability reinsurers reined in capacity at 1.1.2025, regardless of quota share commission terms, which were also coming down. This reflected the depressed underlying rates and potential significant losses working their way through the market.

For monoline E&O and or private D&O placements, capacity was plentiful, and terms were flat-to-improving, depending on the specifics of the deal.

Elsewhere, there was an orderly renewal for US surety at 1.1.2025, as buyers and their reinsurers reached an equilibrium in a broadly firming market.

Supply and demand dynamics remained stable with adequate capacity, although reinsurers continued to seek increased retentions, exerted rating pressure on reinstatement premiums and expressed an overall strong desire to obtain sufficient rate for the exposure they assume.

United Kingdom

Numerous mergers and acquisitions in the UK insurance market in recent years have resulted in a significant reduction in standalone UK property catastrophe and risk placements being purchased over this period.

This dynamic coupled with a largely benign year for catastrophe and continued interest in the UK from reinsurers has led to reinsurance supply outpacing demand, leading to rate softening and some loosening of contractual terms.

In property catastrophe programs, buyers pushed for an increase to flooding hours clauses — from two weeks to three weeks, or 504 hours, and successfully, on a case-by-case basis, negotiated for the return of prepaid reinstatements for the top layers of programs, after they were pushed out by reinsurers at 1.1.2023.

In the per risk market, after an average year for risk loss, capacity levels were largely stable, with programs renewing at broadly flat risk-adjusted rates.

A potentially more complicated motor renewal was avoided by the timely arrival of the Personal Injury Discount Rate (also known as the Ogden rate) for England and Wales.

The UK's Lord Chancellor Shabana Mahmood announced her intention to increase the personal injury discount rate in line with Scotland and Northern Ireland to +5% for both England and Wales in early December, allowing for a relatively straightforward renewal.

Ample supply of capacity meant there was sufficient market pressure to achieve competitive pricing on excess of loss programs. Additionally, those primary carriers who are more capital constrained were able to get their quota share treaties placed with relative ease.

Motor buyers sought value at this renewal, and if reinsurance was not priced attractively enough, they retained more and considered more structured reinsurance solutions at the lower end of programs.

And in the retrospective market, activity picked up in the latter half of 2024 for UK & Ireland, driven largely by motor and Lloyd's opportunities. This momentum is likely to continue in 2025, with the Ogden rate certainty predicted to increase the likelihood of execution next year.