This report covers the 1 July renewal period.
Reinsurance buyers experienced a more welcoming market at 7.1.2024 compared to recent years, and in many ways, this improvement was no surprise.
There were near-record returns for reinsurers in 2023, exceeding 20% ROE in many cases. The first quarter of 2024 has followed a similar trend, with up to a 12% improvement in combined loss ratios, helping to build reinsurers' capital base and confidence to deploy their capital. At the same time, nonlife insurance-linked securities (ILS) capital has grown to a record level, driven by increased investor interest.
This trend has created a more favorable market for buyers, with sufficient capital and capacity to meet demand.
Executive summary
Property
- Improved pricing with risk-adjusted catastrophe placements remained flat to -10%, and demand for additional capacity was met, including extra USD 3 billion to USD 5 billion for Florida.
- Predictions of an active 2024 North Atlantic Hurricane season have not significantly affected pricing and capacity of traditional reinsurers, but some ILS capacity providers, ILW capacity providers, and retrocession capacity providers moderated their appetite for US and Caribbean Catastrophe exposures.
- Estimated economic losses of USD 43 billion and insured losses of USD 20 billion in Q1 2024, driven by severe convective storms (SCS) and secondary perils, together with the unexpected flood losses in UAE, Southern Germany, and Brazil in Q2 2024, reinforced reinsurers ongoing discipline on retention levels.
Casualty
- Underwriters in the casualty insurance sector are less confident than those in the property insurance sector with increased concerns over rate adequacy in the US, driven by adverse development reported by liability insurers in Q4 2023.
- Successful placements were achieved by cedants who effectively communicated their underwriting and pricing strategies supported by strong analysis.
- While supply and demand dynamics remain stable with adequate capacity, there have been some minor changes in reinsurer panels indicating lack of consensus on underlying issues.
Specialty
- Reinsurers in the specialty lines sector have maintained underwriting discipline.
- This has resulted in no capacity constraints for reasonably priced and structured programs, except for UNL retrocession.
