Reinsurance buyers at April renewals benefited from a “dramatic shift” towards ample property catastrophe capacity, in a trend that bodes well for the mid-year period, Aon says. 

April 1 renewals in Japan reinforced positive signs from the US in January, with pricing flat to slightly down, while South Korea, China and India also had varying degrees of increased competition for catastrophe business, according to the global broker ahead of the release of a market report. 

“As mid-year renewals get under way for the catastrophe-exposed markets of Florida, Australia and New Zealand, reinsurers are indicating a strong appetite for catastrophe risk,” Aon Reinsurance Solutions Asia-Pacific CEO George Attard said. 

“We would expect the positive trend of the January and April renewals to continue at mid-year renewals, with adequate capacity for property catastrophe risks and enhanced pricing competition.” 

Insurers looking to purchase additional limit will find adequate capacity for their needs, Mr Attard says. 

While pricing was broadly flat for property catastrophe reinsurance at the April renewals, certain Asia-Pacific markets and product lines remained challenged and subject to tightening terms and conditions, according to Aon.

These included property per-risk reinsurance, industrial fire accounts, certain natural catastrophe loss-affected regions and US-exposed casualty treaties. 

Aon forecasts as much as $US7 billion ($10.8 billion) of additional demand from US insurers for property catastrophe limit at the mid-year renewals, as programs keep pace with inflation and evolving views of risk, and given a resurgent Florida market. 

Total global reinsurance capital of $US670 billion ($1.03 trillion) is close to 2021 peak levels due to strong reinsurer results, a recovery in asset values and an increase in insurance-linked securities capital, Aon says. 

Global natural catastrophe insured losses totalled $US118 billion ($181 billion) last year, but many reinsurers performed strongly due to higher pricing and retentions. 

“Early analysis suggests global reinsurers posted an average combined ratio of around 90% and an average return on equity of around 18%, representing one of the sector’s best-ever results,” Aon said.