John Doyle, President and CEO of broking group Marsh McLennan (MMC), said earlier today that reinsurance market conditions remain stable, and that early signs suggest a better environment for cedents at the June 1 Florida catastrophe risk renewals.
Speaking during the MMC first quarter 2024 earnings call, Doyle and Dean Klisura, CEO of MMC’s reinsurance broking arm, Guy Carpenter, discussed overall reinsurance market conditions, as well as the experience at the April 1st renewals.
“Reinsurance market conditions remain stable with increased client demand and adequate capacity,” said Doyle. “In the April renewal period, US property cat reinsurance rates were flat, with some decreases for accounts without losses. Loss impacted accounts averaged increases in the 10 to 20% range.”
Providing a little more colour on the April 1 property renewals specifically, Klisura noted a continuation of market conditions that were experienced at January 1.
“Market conditions are stable, but we’re definitely seeing increased client demand to buy additional property cat limit, particularly at the top end of programmes. That was very pronounced throughout the first quarter, at 1/1, through the quarter, and certainly that trend continued on April 1,” he said.
“Reinsurer appetite has increased for property cat, there’s an inflow of capital and capacity, competition at the top end of programmes, it’s been good for both buyers and sellers in the marketplace,” added Klisura.
Commenting specifically on US property cat at April 1, Klisura reiterated that capacity was strong and the market was generally flat to down incrementally for clients without cat losses.
“Accounts with cat losses saw 10% to 20% of rate increases. But keep in mind we give you risk-adjusted figures, but when you factor in inflation, exposure growth, value growth, premiums on these cat programmes are still increasing year over year. It continues to be a tailwind for Guy Carpenter in the marketplace. And as I said, there’s a lot of competition for cat business,” said Klisura.
April 1 is the main renewal period for Japan cat business, and Klisura explained that this was a very orderly market with sufficient capacity, adding that many cat programmes were oversubscribed.
“We didn’t observe any structural changes. Attachment point stayed where they were from a year ago. And again, it was a market that was down on average 5% from a rating perspective, and we didn’t really observe any rate impact from the January earthquake in Japan. Overall, a very orderly market at April 1 in Japan,” he said.
Looking ahead to the key mid-year renewals, Doyle said that, “Early signs for June 1 Florida cat risk renewals point to improvedmarket conditions for cedents; increased reinsurance appetite for growth should be adequate to meet higher demand.”
Interestingly, Doyle also commented on the fact that insurers and reinsurers remain cautious about the rising cost of the risk environment.
“And so, while again a stabilising market is better for our clients overall, I don’t expect that relative stability to change anytime soon, given some of the rising cost of risk issues that the insurance community is confronting today,” he said.
Marsh McLennan announced a very solid set of results for the first quarter of 2024, with revenue up 9% to $6.5 billion, supported by 7% revenue growth at Guy Carpenter.
