Property renewals largely orderly, rate reductions ‘entirely rational’ says Gallagher Re

Global property reinsurance renewals were largely orderly at the January 1st, 2025, renewals, and although reduced risk adjusted pricing was greater than many sellers planned for, is “entirely rational and expected” given plentiful capacity and robust results for 2024, according to Gallagher Re.

The reinsurance broker has published its 1st View Report for the 1.1 2025 renewals, which explores current market conditions at the key renewal date.

In the property segment, Gallagher Re highlights a largely orderly renewal, as buyers benefitted from healthier market dynamics supporting a sufficient supply of capacity.

The broker notes the near elimination of differential terms and other improvements, such as pre-paid reinstalment provisions as interesting developments, as well as the fact more reinsurers were prepared to support lower level occurrence and aggregate protections.

In property catastrophe reinsurance, pricing moderated down on average, as premium trended higher on exposure growth. According to Gallagher Re, the top end of excess of loss towers experienced the steepest competition as reinsurance companies remained focus on mitigating loss frequency.

In the casualty area, the US market is experiencing tighter capacity compared to both the property and specialty segments, and this is despite some improvements in the underlying market.

Gallagher Re explains that some sellers are still hesitant to write casualty business due to strict combined ratio targets, while others see potential in the market regardless of any capacity constraints. Ultimately, performance differences among primary insurers resulted in varied outcomes and risk appetites for reinsurers.

In the specialty segment, numerous areas have seen interesting developments, according to the broker. Better trading conditions and an abundance of capacity have provided buyers of protection with greater negotiating power.

Overall, explains Gallagher Re, non-life primary insurers and reinsurers have benefited from price increases in the primary market, while reinsurers have gained even more given the elevated reinsurance pricing, tighter terms, and the lowering of property cat attachment points.

For 2024, the broker expects reinsurers to achieve a combined ratio near or below 90%, and a return on equity in the low teens.

“In areas where growth was most sought, pricing pressure peaked, resulting in reduced risk-adjusted pricing in property catastrophe and specialty, except for loss-impacted programs. The US casualty market remains divided, with some seeing opportunities to expand amid uncertainty, while others adopt a cautious approach. The complexity across business lines and regions has enabled brokers and reinsurers to collaborate closely with buyers, enhancing alignment and risk assessment,” said Tom Wakefield, CEO Gallagher Re.

This website states: The content on this site is sourced from the internet. If there is any infringement, please contact us and we will handle it promptly.