Reinsurance market to remain largely attractive for buyers and sellers in 2025: Aon

Global broking group Aon expects the reinsurance market to remain largely attractive for both buyers and sellers of protection in the months ahead, but has called on reinsurers to demonstrate their value as they target top line growth.

In its latest Reinsurance Market Dynamics report, which explores the January 1st, 2025, reinsurance renewals and market trends through 2024, re/insurance broker Aon states that primary insurers will be looking for more support from sellers for volatility losses, as well as further improvements in price, and also terms and conditions.

Reinsurers produced strong results in 2023 and the same is expected for 2024 when companies announce their full-year results in the coming weeks, and Aon suggests that buyers will have some expectations of their reinsurance partners as they, as well as investors continue to make strong returns.

“While we expect the market will remain largely attractive for both buyers and sellers in 2025, reinsurers will need to demonstrate their value if they are to fulfill their growth ambitions. The most successful reinsurers will be those that are able to meet clients’ needs holistically, across their portfolios. The market’s willingness to deploy its capacity in support of currently unmet need will define the sector’s long-term relevance,” says the broker.

As highlighted in Aon’s January 1 renewals report, the broker expects reinsurance demand to remain strong next year, even if it is at a lower growth rate than 2024 as inflation has moderated. Here, primary market trends are expected to fuel demand increases for targeted reinsurance protection.

According to Aon’s latest Capital Poll, most US insurers expect to exceed a growth rate of 5% in 2025, with a quarter growth expected at 11% or higher in 2025. The report explained that 66% of respondents believe they have sufficient or excess capital. However, in comparison to commercial insurers, personal insurers are capital-constrained, with 22% saying they may need to slow growth to manage capital.

“As a result, survey respondents expressed an increased interest in structured reinsurance, such as structured quota share reinsurance. Loss portfolio transfer and adverse development reinsurance covers could also help ease earnings volatility for casualty insurers as social inflation continues to impact results. In addition, 29 percent of U.S. insurers view current catastrophe retention levels as “high” relative to expected earnings,” says Aon.

It’s been widely reported that reinsurers had more appetite and deployed capital at the 1.1 renewals, which isn’t too surprising when you consider that total, dedicated reinsurance capital hit a new high of $715 billion as at September 30th, 2024, with growth in both traditional and alternative capital, according to Aon.

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