In the global non-marine retrocession market, mid-year renewals have exhibited a greater sense of orderliness compared to the dislocation witnessed during January 1, according to Gallagher Re’s 1st View renewals report.
Market participants benefited from increased clarity on business plans, improved inwards rating environment, and a better understanding of market requirements.
These factors enabled buyers to better prepare for the challenges ahead and align their purchases with prevailing market dynamics.
Renewal processes were generally smooth, with timely quoting and negotiations concluded well in advance of inception dates.
Pricing levels have remained broadly consistent with those observed at the beginning of the year, indicating that underwriters have maintained discipline in terms of coverage and attachment points.
The capacity of the UNL market during mid-year renewals is not as limited as it was during the January renewals. However, the available supply is primarily focused on the middle and upper sections of programs.
The release of trapped collateral resulting from Hurricane Ian has also played a role in alleviating capacity constraints, facilitated by Buffer Loss tables and decreasing client loss numbers.
Sufficient capacity has been available for buyers seeking coverage for their core layers, provided they meet coverage and pricing requirements.
However, an oversupply of capacity has been noted for tail protections, particularly for single peril region coverages. On the other hand, the market remains undersupplied for bottom-end and true frequency level covers.
The strong performance of catastrophe funds throughout 2023, along with a significant pipeline of maturities, has attracted new inflows into the market.
As a result, there has been an increased appetite for lower attachment points relative to the previous January renewals, as well as a reduction in pricing for tail-end indexed protections.
While quota share capacity remains somewhat constrained on a traditional basis, the improving first-tier rating environment has been successful in drawing new capital into investors’ quota share strategies.
