Reinsurance industry poised to meet demand at Jan 1, Gallagher projects strong 2025

With the reinsurance industry remaining adequately capitalised and poised to meet demands at the upcoming January 1 renewals, J. Patrick Gallagher, Jr., Chairman, President and CEO of A.J. Gallagher & Co., remains confident that Gallagher Re will perform “very well” in 2025, regardless of how the market environment unfolds in the near term.

Speaking in the firm’s Q3 earnings call, Gallagher noted significant recent developments in the property market over the past month, namely the events of Hurricane Milton and Helene, which he said are “adding some complexity” to the January 1 renewals.

He added, “While it’s still early, we now believe a flattish renewal is more likely than the downward pressure previously discussed.

“Don’t forget, the US hurricane season is not over for another month.”

For casualty risks, Gallagher believes that reinsurers will remain cautious heading into next year, especially if there is more noise related to US reserve adequacy.

“We think differentiating underwriting practices will likely be the key to a successful renewal for clients,” Gallagher said.

He went on, “Overall, the reinsurance industry remains adequately capitalised and is likely to meet capacity demands at the upcoming January 1 renewals.

“We continue to believe Gallagher Re will perform very well in 2025, regardless of how the market environment unfolds in the near term.”

For Q3 of 2024, A. J. Gallagher reported net earnings of $314.1 million, up 12% from the same period of last year, while total revenues increased 13% to $2.77 billion. Meanwhile, the firm’s reinsurance wholesale and specialty businesses saw overall organic growth of 8% in the quarter.

During the earnings call, Gallagher additionally highlighted the firm’s M&A activity in Q3 of 2024, noting that it maintained discipline, completing four new mergers at fair prices, and contributing an estimated $47 million in annualised revenue.

Gallagher continued, “Looking ahead, we have more than 100 mergers in our pipeline, representing approximately $1.5 billion of annualised revenue.

“Of these 100 potential partners, we have about 60 turn sheets signed or being prepared, representing around $700 million of annualised revenue.”

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