Property catastrophe renewals were consistently oversubscribed at January 1 as reinsurer appetite increased more than demand, with a range of pricing outcomes as non-loss-impacted renewals saw risk-adjusted rate reductions of 5% to 15%, according to reinsurance broker Guy Carpenter.
At the same time, and in contrast to that broader property cat market, loss impacted layers saw adequate capacity with risk-adjusted rates from flat to up 30% in regions such as the U.S., Europe, and Canada.
Guy Carpenter notes that there was a range of pricing outcomes at the January 1st, 2025, renewals that varied by region, attachment point, and reinsurer views of price adequacy.
The reinsurance broker estimates that reinsurer appetite increased 10% to 15%, while demand only rose by 5%, noting that rate reductions and additional capacity reflect strong appetite from companies on the back of another profitable year in 2024, and a 6.9% rise in total dedicated reinsurance capital to $607 billion. Additionally, Guy Carpenter highlights continued reinsurer discipline around property cat program attachment points and pricing, and also meaningful cedent actions to improve underlying portfolio profitability.
In recent years, reinsurers pushed for structural changes and the now higher attachment points have benefited companies as insured losses from natural catastrophe events remain elevated. In 2024, global cat losses neared $130 billion, notes Guy Carpenter, with an estimated reinsured share of these losses falling to 14%, which is down from the average of 20% pre-2023.
“Given the increased catastrophe attachment points of recent renewals, supplemental purchases, such as frequency protection and other retention buydown options, play an important role in bringing balance to the market and ensuring reinsurance is impactful on cedent capital and volatility management,” says Guy Carpenter.
Meanwhile, the 144A catastrophe bond market remained robust at year-end, with 67 different catastrophe bonds brought to the market for approximately $17 billion in limit placed in 2024, according to Guy Carpenter’s figures.
There was cause of concern around casualty reinsurance programs, but Guy Carpenter notes that the year-end renewals were completed with varying outcomes, as proportional casualty structures generally experienced ceding commissions that were flat to slightly down, whereas excess of loss general liability and excess/umbrella placements continued to face pressure on treaty terms. Similar to property cat, cedents considered the value of casualty reinsurance by weighing cost and structure options.
Elsewhere, the cyber reinsurance market remained both “dynamic and innovative”, with buyers or protection exploring several blended solutions, from pro rata to event excess of loss and aggregate stop loss structures.
In summation, cedants continue to manage reinsurer partnerships holistically, trading across product lines and treaties, which is Guy Carpenter feels is critical in the current environment where conditions vary across property and casualty lines.
Dean Klisura, President & Chief Executive Officer, Guy Carpenter, commented, “It is critical that reinsurers take a long-term view and are constructive partners for our clients. Renewal outcomes at year-end reflect reinsurers’ positive property experience over the last two years and casualty portfolios that are well-positioned for future profitability.”
The post Reinsurer appetite up at Jan 1 as loss-free property cat rates fall 5-15%: Guy Carpenter appeared first on ReinsuranceNe.ws.
