KBW has reported that in Q2 2023, it expects most underwriters to report “chunky-but-manageable catastrophe losses,” reflecting the US weather, adding that reinsurers’ exposure is materially constrained by rising attachment points.
Analysts expect property reinsurers to bear some losses, notably from smaller insurers exposed to the intense storms between June 10 and June 19 that hit numerous states across the U.S.
In 2023, reinsurers have pushed for higher attachment points as they look to move away from frequency risks, which, as explained by analysts will see primary insurers retain a significant majority of Q2 2023 gross catastrophe losses.
Ultimately, there are significantly fewer aggregate covers which means that these losses generally aren’t bringing the cedents closer to reinsurance recoveries, say analysts.
For reinsurers, analysts expect core and catastrophe ratios in reinsurance to decline year over year, including earned rate increases above loss trends and modest catastrophe losses.
Reinsurers are expected to report significant risk-adjusted catastrophe reinsurance increases, improved terms and conditions, and solid premium growth from the June and July renewals.
For Q2 2023, KBW anticipates that commercial insurers and reinsurers will report accelerating property rate increases, steady casualty rate rises, and modest overall reserve releases.
When it comes to personal lines, analysts suggest that constrained marketing spend and compounding earned rate increases should increasingly approach still-elevated loss trends.
