The industry’s attention turns to Monte Carlo soon for the Rendez-Vous de Septembre, the annual talkfest on the state of the reinsurance market after the mid-year catastrophe renewals.

Reinsurers head to the French Riviera in a confident mood after pushing through some of the sharpest rate increases in recent years following extreme weather events including the 2022 Australian floods.

Industry reports issued ahead of the September 7-11 gathering say reinsurers are keen to write more catastrophe risks after adjusting their portfolios, but will do so with caution.

“We expect global reinsurers to seize the opportunity to deploy more capital over the next two years, within strict limits,” S&P Global Ratings says in a report titled Reinsurers Show Growing Appetite for Natural Catastrophe Risks.

“We expect reinsurers to remain cautious, even as they expand their exposure. In particular, we anticipate that they will continue to be restrictive on their exposure to higher-frequency and mid-size events and reduce quota share and aggregate cover offerings.”

The S&P report says property catastrophe losses were at or above budget between 2017 and 2022, forcing the industry to undertake “much-needed” price corrections.

“Significant pricing increases, particularly in 2023, combined with reinsurers’ lower loss experience in 2023, made property catastrophe business a major contributor to the industry’s overall strong results and encouraged reinsurers to increase their exposure,” the report says.

At the January renewals, most of the 19 largest global reinsurers rated by S&P increased their exposure to natural catastrophes, a sign of their improved risk appetite.

“Favourable reinsurance pricing and improving net investment income in 2023 and 2024 have presented reinsurers with opportunities to deploy capital and expand their property catastrophe business,” the report says.

Higher prices aside, another trend emerged in the renewals market, the S&P report says. Insurers have started to absorb more losses, given the higher cost of catastrophes.

Last year was an active one in terms of cat losses. Citing Swiss Re figures, the S&P report says global insured losses from natural catastrophes came to $US108 billion ($159 billion), above the long-term industry average. But higher attachment points, combined with a pattern of frequent mid-size events last year, meant a large portion of the losses fell mainly on primary insurers.

“Primary insurers bore a larger-than-usual share of the losses, stemming from the repeated and severe convective storms in the US,” the report says. “Conversely, losses at our sample group of global reinsurers were well within their budgeted natural catastrophe load.”

A separate report from AM Best says the reinsurance industry, particularly the big four of Munich Re, Swiss Re, Hannover Re and Scor, continue to benefit from hard market conditions this year.

Their first-half results and 2023 performance show their non-life operations benefiting from continued strong pricing and terms “and a general increase in attachment points leading to an improvement in performance metrics compared to 2022”, the ratings agency says.

“With the hard reinsurance market conditions continuing in 2024, the big four European reinsurers have good appetites for property catastrophe.

“This follows a period of right-sizing of portfolios, increases in attachment points, and a move away from aggregate covers and working layers.

“Although there is no sign yet of this discipline disappearing, the mood has shifted somewhat to focus on taking advantage of the good pricing while it lasts.”

AM Best says the big four are aiming for growth in specialty segments such as cyber, marine, engineering and other lines in both insurance and reinsurance. This is part of a push for increased diversification and more stable earnings.

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