Reinsurance markets have shown marked improvement as of July 1st, buoyed by robust returns in 2023 that saw some reinsurers achieving over 20% return on equity (ROE), according to insights from Gallagher Re.
This positive trend continued through the first quarter of 2024, highlighted by a significant 12% enhancement in combined loss ratios. This improvement has not only strengthened reinsurers’ capital positions but also bolstered confidence across the industry.
Meanwhile, nonlife insurance-linked securities (ILS) capital has soared to unprecedented heights, driven by increased investor interest, thereby expanding market capacity.
In the property sector, enhanced pricing and ample capacity have effectively met demand, with an additional $3 billion to $5 billion allocated for Florida alone.
Despite predictions of an active 2024 North Atlantic Hurricane season, traditional reinsurers have maintained stable pricing and capacity levels, while some ILS and retrocession providers have adjusted their appetite for US and Caribbean catastrophe risks.
In contrast, casualty insurers, particularly in the US, have expressed less optimism compared to their property counterparts. Concerns over rate adequacy have been exacerbated by adverse developments reported in Q4 2023. However, effective communication of underwriting and pricing strategies has facilitated successful placements.
Within specialty lines, reinsurers have upheld disciplined underwriting practices, ensuring sufficient capacity for well-structured and competitively priced programs, with the exception of UNL retrocession.
Overall, these developments underscore a cautiously optimistic outlook for the reinsurance market, supported by improved financial performance and strategic risk management practices.
