Ahead of the release of its Reinsurance Market Dynamics January 2025 Renewal report next week, re/insurance broking group Aon has noted the greater flexibility exhibited by reinsurers at the January 1st, 2025, renewals, following consecutive years of strong results in the hard market environment.
According to Aon, the report will reveal that available capacity expanded at the renewals and was more than sufficient to meet further growth in demand from buyers of protection.
In fact, Aon estimates that global reinsurer capital, so across both traditional and alternative capital, increased by $45 billion from the end of 2023 to a new high of $715 billion at September 30th, 2024, with growth driven by retained earnings. The broker states that capacity has also been bolstered by an easing of conditions in the retrocession market.
In the property space, buyers with loss-free programs were able to secure catastrophe coverage on incrementally improved terms at 1.1 2025, as the desire among reinsurers to grow created opportunities for cedents to align coverage and purchase additional reinsurance.
Aon states that global insured losses from natural catastrophe events will exceed $140 billion in 2024, driven by hurricanes Helene and Milton in the U.S., but also severe storms and flooding in parts of Europe and the UAE, as well as costly adverse weather events in Canada.
“Renewal impacts were largely confined to the most affected local markets, notably Canada, Central and Eastern Europe and the United Arab Emirates,” says Aon.
In the casualty reinsurance sector, Aon reports that renewals were broadly stable overall, even in the U.S. where adverse development on prior underwriting years was a real issue for some in 2024. The broker notes that strong underlying insurance pricing helped to offset reinsurer concerns around adverse claims and litigation trends.
In the specialty area, Aon says that the majority of sellers continue to view the sector as a source of diversifying growth, with January renewal outcomes varied depending on class of business and loss activity. However, pricing was generally stable to slightly lower.
“We observed an increased level of appetite in high margin lines of business and regions at the January 1 renewals, driven by reinsurers that desired improved signings across a broad swath of insurer clients. Many reinsurers need to revisit how they articulate and deliver value to clients in a sustainable, profitable manner, as now is the time to unleash financial and intellectual capital to help insurers grow profitably and expand their offerings to sustain a healthy market,” said Alfonso Valera, co-CEO EMEA at Aon’s Reinsurance Solutions.
Tomas Novotny, co-CEO EMEA at Aon’s Reinsurance Solutions, added: “During the January renewal season, reinsurers demonstrated strong appetite for writing business in this current hard market, and most renewals resulted in meaningful over-subscriptions. Reinsurers are clearly trying to maximize the scale of the business written with great return-on-equity potential, and the most successful are those that are able to meet clients’ needs holistically, across their portfolios and across the board on their catastrophe programs.
“The market’s willingness to deploy its capacity in support of currently unmet need will define the sector’s long-term relevance, and we should all remember that reinsurance is not just a transaction; it’s about partnering with insurers and helping them grow, with Aon here to drive that process and shape better business decisions for all parties.”
When Aon’s full report is released on January 6th, 2025, it will be interesting to see how property cat reinsurance rates trended at the 1.1 renewals.
This morning, reinsurance broker Guy Carpenter reported that loss-free programs saw declines of up to 15%, while loss impacted layers saw rate increases of as much as 30% in regions such as the U.S., Europe, and Canada.
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