Property catastrophe renewals on 1 January were oversubscribed as reinsurer appetite exceeded demand, leading to risk-adjusted rate reductions of 5-15 per cent for non-loss-impacted programmes, according to Guy Carpenter.
In the report, the firm says pricing outcomes varied widely based on region, attachment point, and reinsurers’ views on price adequacy.
The surge in capacity was fueled by a 10-15 per cent increase in reinsurer appetite, while demand grew by approximately 5 per cent.
Guy Carpenter attributes the surge in reinsurance capacity to strong returns, with 2024 projecting a 17.3 per cent average return on equity, alongside a 6.9 per cent increase in dedicated capital to US$607 billion.
The company observes that reinsurers maintained discipline in setting programme attachment points and pricing, while cedents improved portfolio profitability through rate adjustments, limit management, and risk selection.
In addition, the report notes that attachment points have significantly affected reinsurer results, with global catastrophe losses in 2024 nearing US$130 billion and the reinsured share of losses falling to 14 per cent from the pre-2023 average of 20 per cent.
Loss-impacted layers in markets like the US, Europe, and Canada secured adequate capacity, with risk-adjusted rate changes ranging from flat to 30 per cent increases.
Meanwhile, the 144A catastrophe bond market remained robust, placing US$17 billion in limits across 67 transactions by year-end.
Furthermore, Guy Carpenter says casualty reinsurance renewals faced varied outcomes, with proportional structures experiencing flat to slightly reduced ceding commissions, while the cyber reinsurance market continued to innovate with diverse solutions such as pro rata, event excess of loss, and aggregate stop loss.
