Analysts at JP Morgan expect the reinsurance market to stabilise in 2025 with pricing at still healthy levels despite minor declines, while profitability should be supported by a continuation of firm terms and conditions as attachment points hold.
With the January 1st, 2025, reinsurance renewals fast approaching, industry observers will be wondering how rates will trend in 2025 after another year of more than $100 billion of insured nat cat losses and the active Atlantic hurricane season.
Prior to the hurricane landfalls in the US this year, market consensus pointed to some softening at 1.1, and while losses from the storms aren’t expected to drive further hardening, analysts now foresee a more stable environment for the sector in 2025.
“In reinsurance, the market is expected to stabilise with pricing likely to see minor declines (in the low single digits we believe) in 2025 which would still leave pricing at healthy levels,” says JP Morgan.
Adding: “Our base case is for pricing to return to around 2023 levels, which was a year where the reinsurers produced strong margins. More importantly, we expect terms and conditions to remain firm, with the higher attachment points achieved in 2023/24 expected to hold, which should support profitability.”
Across the broader property and casualty (P&C) insurance and reinsurance space, analysts at JP Morgan believe that the pricing cycle has peaked in many areas, and therefore expect prices to flatten or see minor declines. That being said, analysts do not foresee “a collapse in prices” amid the changed view of risk.
“Despite this we believe a majority of lines would still remain adequately priced which should support (re)insurers’ margins, however, with earnings expectations having caught up for the P&C (re)insurers we see less room for positive earnings surprises for the sub-sector on average,” says JP Morgan.
