Strong reinsurer appetite drives excess property catastrophe capacity at January 1
At January 1, non-loss-impacted property catastrophe renewals saw notable risk-adjusted reinsurance rate reductions of 5% to 15%. However, there was a range of pricing outcomes that varied by region, attachment point and reinsurer views of price adequacy.
Property catastrophe renewals were consistently oversubscribed as reinsurer appetite increased by 10% to 15%, while we estimate demand only increased by approximately 5%. Rate reductions and additional capacity reflect strong reinsurer appetite driven by:
- Another profitable year in 2024, featuring projected average reinsurer returns on equity of 17.3%,
- Total dedicated reinsurance capital increasing by 6.9% to $607 billion,
- Continued reinsurer discipline around property catastrophe program attachment points and pricing, and
- Meaningful cedent actions to improve underlying portfolio profitability (rate improvement, limit management and disciplined risk selection).