Tom Wakefield, Global CEO Gallagher Re, said: “With the improved terms and conditions available in the reinsurance market, some existing reinsurers are leaning into the hardening market, committing more of their existing capital, as well as any new capital they are raising, to reinsurance.”
London:
The run-up to the July 1 reinsurance renewals saw a continuation of the pricing and structural market dynamics that defined the 1/1 renewal period, with mid-year placements catching up and aligning with prevailing market undercurrents, according to the latest 1st View renewals report from Gallagher Re, the global reinsurance broker.
While significant increases on a year-on-year basis were seen, the market was orderly and rational with adequate capacity from the reinsurance market available to support client needs. This resulted in a less-stressed renewal process in most cases.
Key Findings:
· The market has faced a continuation of pricing and structural dynamics as reinsurers sought to bring terms and conditions into line with those seen at January 1 and April 1 renewals
· New capital entering the market (both traditional and ILS) coupled with moderated demand, through increased retentions and limited purchases of additional limit and clearer expectation management by all parties, have led to a more orderly renewal
· The casualty treaty market remained straightforward, with adequate capacity and flat to moderate rate increases, driven primarily by reinsurer comfort with improvements to underlying portfolios
· Strong returns achieved by ILS funds in 2023 to date leading to growing investor interest, and in turn an increase in the overall number of bonds being issued
· ILS attention shifting from traditional property perils to other opportunities, such as cyber and casualty, as the property market begins to move into balance
· Limited signs of completely new reinsurance entities forming, and the trend is one of consolidation into fewer, larger reinsurance entities – which, in the absence of any major losses, points towards pricing stability
Tom Wakefield, Global CEO Gallagher Re, said: “With the improved terms and conditions available in the reinsurance market, some existing reinsurers are leaning into the hardening market, committing more of their existing capital, as well as any new capital they are raising, to reinsurance.”
However, in contrast to other historic hard markets, there are limited signs of completely new reinsurance entities forming and the current trend is one of consolidation into fewer, larger reinsurance entities – which, in the absence of any major losses, points towards pricing stability,” he added.