January reinsurance renewals were completed relatively smoothly compared with a year earlier when a market reset drove higher pricing and tougher terms, but “underwriting rigour” has continued. 

“In a marked change from a year ago, most reinsurers entered the renewals with ambitions to grow in property catastrophe reinsurance and the market was therefore more consistent in its approach to pricing and terms,” Aon says. 

The broking giant says reinsurers have benefited from a rebound in profitability and capital positions, and greater availability of retrocession capacity, while demand for property catastrophe reinsurance is supported by inflation and exposure trends. 

Deductibles were generally stable after significant adjustments a year ago, but loss-affected regional insurers and European markets recorded increases.  

Aon Reinsurance Solutions Global Growth Leader Joe Monaghan says the property renewals have set the stage for an “interesting” year. 

“As capacity continues to build, there will be opportunities for insurers to buy additional limit at the top of programs, and for reinsurers to work with intermediaries to support clients challenged with retained losses, especially from secondary perils,” he said. 

In casualty, some reinsurers adopted a tougher stance before the renewals, against a backdrop of prior-year reserve deterioration and adverse litigation trends, but ultimately capacity was available. 

The January renewals are dominated by the US and Europe. Japan features in April and Australian renewals are focused on the mid-year. 

Marsh McLennan reinsurance specialist Guy Carpenter says the latest renewals reflected ample capacity and a commercial approach to trading partnerships, albeit with underwriting rigour. 

Guy Carpenter, in partnership with AM Best, estimates total dedicated reinsurance capital increased compared with year-end 2022. But unlike experience following past market corrections, capital growth was driven by existing reinsurers, with no “start-up class of 2023”. 

Global property catastrophe risk-adjusted rate changes averaged from near flat to single-digit gains on non-loss-impacted programs, and 10-30% increases for those affected by losses, with a wide range of outcomes around the averages.  

AM Best says reinsurers “held strong” over the past year as they enhanced underwriting margins, and even with a more orderly January renewal “participants have not indicated any softening in market conditions”. 

Total reinsurance capital at the end of last year has been estimated at $US561 billion ($852 billion), about 2% below the peak of $US570 billion ($866 billion) set in 2021. 

“However, this is not expected to have a material impact on market conditions, as participants are holding their positions on rate and terms,” AM Best said.