Kevin O’Donnell, President and CEO of RenaissanceRe, stated that the current level of rate established in the reinsurance market is not going to trend down, affirming that there is no indication that the market is returning to pre-23 levels.
Speaking during RenRe’s first-quarter 2025 earnings call, O’Donnell explained that the rate change in 2023 wasn’t a response to a loss, but rather the result of tiresome underwriting results dropping down too low, too many aggregate covers, and the expansion of terms over an extended period.
He said, “The reset at ‘23 was not only a change in price of 50%, it was resetting to levels which are much more sustainable from a terms and conditions perspective, and most importantly, from a retention perspective.”
O’Donnell explained that prior to the reset, the reinsurance market had been unsustainably low in terms of risk transfer, with reinsurers focusing on protecting income statements and primary companies not pushing through adequate rates.
He noted, “What we have now is a much more stable and much more historically normal environment where the primary companies have pushed through rate, better reflected deductibles in the insurance product, reinsurers have moved into balance sheet protection, and retro has dropped out of the low aggregate coverage that reinsurers were buying.”
According to O’Donnell, the market today is more stable and historically normal than it was prior to 2023.
He added, “We think the market, like any financial market, will trade around the level that we’re at, and that’s our belief going into this year, is that there’ll be some trading up and down in different classes.
“But the level of rate that has been established in the market is not going to trend down.”
O’Donnell clarified that while rates may experience slight upward or downward movements, there’s no indication that the market is returning to pre-2023 levels.
RenRe also addressed the upcoming mid-year renewals, with David Marra, EVP and Group CUO, noting that trading conditions are more favourable for reinsurers, with a better balance between supply and demand compared to the January 1st renewals.
