Providing insight from meetings with prominent re/insurance players ahead of the January renewals, analysts from JMP Securities said it “quickly became clear” that this year’s renewal is much more orderly than the “significantly dislocated” renewal a year ago.
JMP’s analysts explained that increased demand for property coverage is largely being met by the market ahead of January 1, 2024, though is not budging from the increased retentions and tightened terms and conditions implemented at last year’s renewal.
The analysts added, “Overall, we view property cat pricing as flat-to-up slightly (risk-adjusted), with the U.S. broadly flat and Europe modestly up.
“Casualty is the rapidly emerging hot topic, in particular, U.S. casualty accident years 2015-2019, with some extending that to include 2020/2021.”
They continued, “Reinsurers are exercising caution with ceding commissions reducing and terms & conditions tightening. Ultimately, this feels like a market where the reinsurers remain firmly in control and likely continues to have legs beyond the January 1, 2024, renewal, particularly if casualty market fears come more fully to fruition in the coming quarters.”
JMP’s analysts highlighted that last year’s property reinsurance renewal saw the most substantial changes in pricing and terms & conditions in well over a decade.
They went on, “Fast forward one year and those changes have proved to be incredibly valuable for reinsurers, with the industry posting strong returns despite more than $100bn in catastrophe losses taking place, as the overwhelming majority of those losses remained at the primary level following increased attachments.”
JMP observed that this proof point has only further solidified reinsurers’ determination to keep these changes intact, stating that in the meetings, they heard of little-to-no concession on this front.
The analysts concluded, “Overall, pricing appears to us to be flat to up slightly, with the U.S. more on the flat end and Europe seeing more meaningful increases, in part catch-up from more muted movements last year as well as in reaction to an active catastrophe year including Italian flooding/hail, a Turkish earthquake, as well as Storm Ciaran.
“We walked away from our meetings feeling that, on the margin, there is some increased desire from reinsurers to deploy capital, but with stringent pricing/terms requirements and focused in the mid-to-upper layers of programs, where there is demand from cedants to buy additional limit that was desired but largely not available last year.”
