Insurers have generally achieved positive mid-year reinsurance renewals in a more competitive marketplace, Aon says.

Capacity for US catastrophe-exposed business was more than enough to meet increased demand, with upwards of $US10 billion ($15 billion) of additional catastrophe limit purchased. 

Increased appetite from traditional reinsurers and the insurance-linked securities (ILS) markets led to downwards pressure in the US, with Florida specialists seeing rate reductions for the first time in three years. 

Australia and New Zealand insurers experienced stable market conditions, with about 80% of their property catastrophe reinsurance business renewed at mid-year. 

Latin American and Caribbean renewals were also broadly positive, with ample capacity to meet demand and risk-adjusted flat to single-digit rate increases. 

“We are pleased to see the ongoing stability of the reinsurance market, which now presents profitable growth opportunities for both insurers and reinsurers,” Aon US reinsurance solutions co-president Steve Hofmann said. 

Total reinsurance capital reached a record $US695 billion ($1.04 trillion) by the end of the first quarter, up from $US670 billion ($1 trillion) at the end of last year, supported by retained earnings, recovering asset values and catastrophe bond market inflows. 

Aon Securities estimates overall ILS capital increased to a new high of $US110 billion ($165 million) through the second quarter, from $US108 billion ($162 million) at year end. For the first time, more than $US8 billion ($12 billion) of catastrophe bonds were issued in a quarter. 

Aon provided the details before today’s release of its Reinsurance Market Dynamics report, which will also show that reinsurers are generating “robust returns” by historical standards, with annualised return on equity averaging about 20% in the first quarter.