Retrospective market stabilises in H2’24, strong activity seen in North America: Gallagher Re

The retrospective market displayed signs of stabilisation in the second half of 2024, after the previous 18 months featured a contraction of counterparties offering cover, as well as increase in execution risk, amid material prior year adverse development across certain lines and jurisdictions, according to reinsurance broker Gallagher Re.

As per the broker’s 1st View report, a key concern at this year’s 1/1 renewals centered around inflationary pressure on loss reserves, which ultimately caused for reinsurer price discipline to remain high.

Gallagher Re also commented on capital, saying “the amount of capital available to deploy remained plentiful with larger consolidators continuing to seek strategic transactions.

“Mid-size and smaller counterparties sought to play to their strengths, offering solutions across a range of classes of business and deal structures.”

Furthermore, Gallagher Re estimates that approximately 30 deals, worth $6 billion to $7 billion in reserve volume, were completed in 2024.

Geographically, North America was the most active region in 2024 with the market predominantly focusing more on workers’ compensation in comparison to any other class, Gallagher Re explained.

Moreover, UK & Ireland activity began to pick up in the latter half of 2024, which was primarily driven by UK motor and Lloyd’s opportunities. However, deal flow in continental Europe remained subdued, which the broker stated was as a result of cedant capital dampening the regions motivation to transact.

Interestingly, retrospective interest within Asia Pacific (APAC) is beginning to increase, as companies are continuing to explore both capital optimisation and M&A opportunities.

“Overall, the market continued to demonstrate its flexibility in approach, providing a variety of solutions that offered renewable pricing frameworks, relief for trapped capital and forward-pricing mechanisms,” Gallagher Re concludes.

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