The mid-year reinsurance renewals reflected a transitioning marketplace which responded to increased demand for protection, as numerous headwinds continued to shift risk appetites, according to Guy Carpenter, the reinsurance broking arm of Marsh McLennan.
Guy Carpenter highlights a dynamic trading environment at the mid-year 2024 renewals, during which loss-free property programs saw easing of pricing despite a rise in demand.
According to the reinsurance broker, most property placements were completed either early or on time, while risk programs remained under scrutiny amid ongoing concerns around the frequency and severity of large losses.
Reportedly, global property cat reinsurance risk-adjusted rates at mid-year were generally flat to down mid-to high-single digits. In some instances, higher layers of programs saw risk-adjusted rates down 10% or more for non-loss impacted business, in what the broker describes as a moderating but still robust pricing environment.
In fact, Guy Carpenter’s preliminary mid-year US Property Catastrophe Rate on Line Index is near flat year-on-year.
Dean Klisura, President & Chief Executive Officer (CEO) of Guy Carpenter, commented: “Well-positioned cedents achieved greater concurrency and pricing consideration in this positive but still cautious trading environment.
“However, headwinds, including unsettled macroeconomic conditions and the geopolitical environment, are leading to shifting risk appetites. Guy Carpenter provides perspective to our clients to help differentiate them and find the best solutions possible.”
In the casualty market, Guy Carpenter reveals that renewal outcomes varied by sublines as well as reinsurance type. Quota share outcomes were linked to the amount of adverse development, while general liability and excess/umbrella placements that are US exposed continued to experience reinsurance pricing pressure.
Elsewhere, financial lines experienced downward pressure on ceding commissions, while the cyber market remained active at the June and July renewals, with buyers finding improved terms across all structures.
The broker also notes that through the first quarter of 2024, the majority of retrocession buyers looked to secure similar limits to last year, whereas mid-year purchasing saw increased demand in the second quarter from existing buyers and a return of historical buyers.
Lastly, Guy Carpenter highlights the record first half of the year for the catastrophe bond space, driven by a record Q1 and Q2, the latter being the most active quarter in the market’s history.
“The reinsurance industry has responded to measurably increased demand in 2024, which has materialized at a level above many expectations. Reinsurers’ attractive returns and improved capital positions are facilitating increased capacity in several sectors. Guy Carpenter is set to strategically help our clients in this new era of risk,” said David Priebe, Chairman, Guy Carpenter.
