January 1 renewal trends persisted at the Japan-focused April 1 reinsurance renewals, with Gallagher Re reporting that Japanese property catastrophe programmes ran loss free, leading to risk-adjusted rate decreases of between -15% and -17.5%, as buyers took advantage of strategic opportunities.
Reinsurance broker Gallagher Re’s latest 1st View Report examines the important April renewal season, highlighting a resilient reinsurance sector amid geopolitical uncertainty, softening primary markets, and an unpredictable economic outlook.
For cedents, Gallagher Re highlights the availability of strategic opportunities in the current market cycle, as well as the chance to reshape their risk transfer programmes in an effort to build structural resilience and improve the economics of portfolios, while at the same time cutting costs in a more favourable environment.
According to Gallagher Re, buyers achieved significant risk-adjusted rate reductions at April 1 across both property and specialty, while casualty rates were broadly stable.
Outside of Japan, the report finds that property catastrophe in other regions saw risk-adjusted rate decreases of between -7.5% and -25%, reflecting an acceleration in the rate decrease witnessed at January 1.
In terms of casualty, in Japan, programmes’ pricing focused on recognising significant underling mitigation of US exposures, which resulted on average to slight risk-adjusted increases but reductions in total treaty premium spend, says the broker.
“There is an opportunity for clients to use the current window to reduce cost and to build the kind of structural protection that positions them well for whatever comes next,” said Tom Wakefield, Global CEO of Gallagher Re. “Gallagher Re’s analytical depth, market relationships, and structural creativity are helping clients to turn current conditions into durable advantage.”
Ultimately, Japanese buyers entered the 1.4 renewal season with “confidence in the ongoing benefits of their significant portfolio remediation,” and Gallagher Re feels they were rewarded.
The reinsurance broker says that, in the current landscape, cedents should look to move past just accepting lower rates for their desired coverage, and focus on capitalising on the opportunity to build structural resilience into their portfolios.
