Orderly 2024 reinsurance renewals show stability amid industry concerns: S&P Global

Reinsurers are showing interest in the property catastrophe business, benefiting primary insurers. 

The 1 January reinsurance renewals in 2024 were more orderly than the previous year, with ample capacity for short-tail lines, S&P Global Ratings said in a report. 

Reinsurers, fueled by strong earnings in 2023, maintained stability, overcoming lacklustre performance in 2020-2022. The industry faces concerns about natural catastrophes, inflation, and urbanisation, particularly in casualty lines. 

Whilst short-tail lines show a mature hard market, casualty lines experienced gradual pricing increases. Reinsurers pushed for higher pricing due to inflation risk, large jury awards, and adverse reserve developments. 

Despite increased demand, reinsurers maintained underwriting discipline, sustaining reinsurance pricing momentum for 2024 renewals.

Short-tail lines, like property catastrophe, reached a pricing peak in 2023, creating a solid foundation. Reinsurers are showing interest in the property catastrophe business, benefiting primary insurers. 

ALSO READ: January renewals show upbeat market, capital to rise

The retrocession market remained flat, and cedents explored insurance-linked securities (ILS) like catastrophe bonds. Reinsurers held historically high pricing, resulting in strong 2023 underwriting results. Casualty lines faced pricing pressure, with concerns about inflation risk and adverse developments. 

Specialty renewals varied, with political violence and terrorism coverage emphasised in international conflicts. Cyber reinsurance saw ample capacity, but new entrants and cyber catastrophe bonds influenced pricing.

Alternative capital, surpassing $100b in 2023, supports the industry, especially in short-tail lines reinsurance. Catastrophe bond market grew by 21%. Natural catastrophes in 2023 were more frequent than severe, with insured losses reaching $118b globally. 

Despite the impact, reinsurers adapted well in 2023, influencing the pricing landscape. Reinsurers anticipate continued strong results, with favourable pricing conditions in 2024, emphasising the industry's focus on elevated catastrophes and inflation's impact on casualty lines.