Japanese property cat reinsurance pricing ‘eased from a high base’ at April 1 renewals: Howden Re

Japan risk-adjusted catastrophe excess-of-loss (XoL) rates on-line saw reductions of 10-15% at the April 1st, 2025, reinsurance renewals, as pricing “eased from a high base” as sellers looked to protect or grow positions while buyers leveraged support for the more difficult to place programmes, according to reinsurance broker Howden Re.

Overall, risk-adjusted rate reductions in Asia Pacific (APAC), coupled with varied specialty renewal outcomes, reflects “hard market softening” at the Japan-focused 1.4 renewals, according to Howden Re’s analysis.

After some softening at the 1.1 2025 renewals, and the fact the natural catastrophe loss landscape in Japan and the APAC region in 2024 was relatively benign when compared to prior years, the expectation ahead of 1.4 2025 was for property cat rates in particular to come down year on year.

“There were 10-15% risk-adjusted reductions on catastrophe excess-of-loss programmes, whilst global specialty and direct and facultative reinsurance placements varied by class,” explains Howden Re.

The broker reveals that both Japanese wind and earthquake XoL pricing adjusted from a high base at 1.4 2024, following consecutive years of market-driven and post-loss hardening, which began in 2018 and 2019 after the impacts of typhoons Jebi, Hagibis, Trami, and Faxai.

As the broker highlights, over the past 18 months or so, the January 2024 Noto earthquake and the Taiwan Hualien earthquake in April, and Typhoon Yagi in September, were the most significant losses in the APAC region.

There had been some debate around the potential impact of the costly January 2025 California wildfires on the Japanese April 1 renewals, but Howden Re notes that the event, while impactful to reinsurer operating performance, did not “meaningfully constrain supply at 1 April.”

Overall, for Japanese catastrophe XoL programmes, less limit was purchased at the lower end of programmes with some buyers of coverage seeking additional top-layer reinsurance limit to address specific risk concerns.

According to Howden Re, on average, ceding commissions for proportional quake cover increased by around two percentage points, signalling improved terms for cedants, as per-risk commissions varied by programme performance.

Despite rate reductions of up to 15%, Howden Re says that Japan remains an attractive market for reinsurance companies as a result of its high volume, relatively uncorrelated risk and strong level of underwriting expertise supported by experience and exposure data.

Andy Souter, Head of Asia Pacific, Howden Re International, said: “This renewal is, on balance, a welcome reprieve for buyers in Japan and throughout Asia-Pacific on the back of an extended period of significant rate increases. With the recent easing in pricing and stable renewals, it’s a good time for cedents to secure more favourable terms and address specific risk concerns.”

Outside of the property and property cat space, Howden Re’s 1.4 renewal report reveals mixed outcomes at 1.4 for the global specialty reinsurance sector, driven by ongoing uncertainty around war-related losses and macro volatility.

Aviation reinsurance risk-adjusted pricing was largely flat at April 1, showing a slight hardening compared to the 3.5% year-on-year decline seen at 1.1 2025. Howden Re explains that both buyers and sellers engaged “unusually early” while Russian leasing losses added complexity to treaty renewals. One clear trend highlighted by the broker is an increasing imbalance between the direct market, with significant over capacity, and the reinsurance market, which Howden Re says is bracing for impending losses and future hardening.

In the marine and energy space, Howden Re states that the downstream losses experienced in 2024 had little impact on programmes at 1.4, although the Baltimore bridge collapse remained in focus. Additionally, although wildfire exposures were widely discussed, the broker says that within the marine and energy space, specie was the main focus.

In the terror space, reinsurance rates reduced further amid softening on the direct side of the market. The market continues to evolve, explains Howden Re, although consistent event definitions provided some stability, while new capacity is looking to enter the space via MGAs on both the primary and reinsurance side.

In terms of the direct and facultative market, Howden Re highlights resilience with strong demand for XoL capacity despite early 2025 loss activity. Reinsurers, according to the broker, showed greater price discipline at 1.4 than at 1.1, notably in response to California wildfire exposures which were largely retained by cedents.

At the same time, capacity deployment remained healthy with reinsurers preferring to write across towers rather than chase minimum attachments, as buyers looked to reduce retentions too far encountered resistance with terms and conditions largely maintained in-line with 1.1 2025 levels, explains Howden Re.

Chris Medlock, Director, Global Specialty Treaty, said: “The April renewal reflected a broad range of outcomes across specialty and D&F lines. Whilst pricing softened in some areas, reinsurers remained selective and disciplined. Capacity was available but placement success depended on structure, exposure and underlying risk quality.”

The price moderation witnessed in most classes of business at the 1.4 2025 reinsurance renewals was facilitated by rising levels of dedicated reinsurance capital and strong insurance-linked securities (ILS) inflows, says the reinsurance broker, who adds that capital levels now exceed their previous peak.

David Flandro, Head of Industry Analysis and Strategic Advisory, Howden Re, commented: “At this stage of the pricing cycle, profitable growth increasingly requires a greater focus on product development, underwriting strategies and capital management.

“In order to navigate this market phase, comprehensive, integrated capabilities spanning treaty, facultative, MGAs, strategic advisory and capital markets, Howden Re is uniquely positioned to support cedents and reinsurers as they navigate this next critical phase of the cycle.”

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