Gallagher Re, a reinsurance and risk management firm, has released its full-year 2024 Reinsurance Market Report, highlighting an improvement in investment yield for reinsurance companies.
According to the report, the total investment yield rose to 4.4% in 2024, up from 3.9% in 2023. This was driven by a higher running yield and a slightly reduced gains yield.
The Running yield increased to 3.8%, up from 3.2% in the previous year.
Gallagher Re attributes this increase to higher reinvestment rates, which have begun to align returns more closely with new money yields.
While the impact was more muted than in 2023, most of the improvement has been earned, and there remains some room for further, though more modest, upside—contingent on interest rate levels. A decline in rates, however, could lead to reduced running yields.
The gains yield fell slightly to 0.6% from 0.7% in 2023. This was driven by a slight decline in interest rates that boosted bond valuations, along with a stable performance in equity markets. Approximately one-third of the SUBSET companies recorded a negative gains yield in 2024, with most of these seeing negative realised gains.
Despite the decline in gains yield, the increase in total investment yield contributed to a higher reported Return on Equity (ROE) for the year.
These investment yield figures reflect the performance of the SUBSET of reinsurance companies in Gallagher Re’s report, which includes the INDEX firms that provide the relevant disclosure in relation to natural catastrophe losses and prior-year reserve releases.
