Following a mixed pricing environment at the January 1st, 2025, reinsurance renewals, analysts at Moody’s anticipate property catastrophe reinsurance pricing to stabilise somewhat at the upcoming US mid-year renewals, driven by the impacts of Hurricanes Helene and Milton, and the more recent California wildfires.
In a new report, Moody’s noted that several key reinsurance brokers and European carriers have provided updates on their experience at the January 1st renewals, which is when typically between 40% and 60% of a global reinsurer’s portfolio is renewed, including much of the European business.
Among the big four European reinsurers, all except Munich Re, which saw a decline due to underwriting actions, reported premium growth at the renewals, as firms sought to deploy capital in a “still-attractive pricing environment,” albeit softer than a year earlier at the 1/1 2024 renewals.
Moody’s said: “Pricing across the portfolios of these European reinsurers was generally flat, ranging from a -2.1% decrease reported by Hannover Re to a 2.8% overall increase reported by Swiss Re. For its nonproportional business, SCOR reported the first pricing decease (-0.8%) since the January 2017 renewals.”
However, as reported by reinsurance broker Guy Carpenter, the US property catastrophe reinsurance segment witnessed an overall rate decline of 6.2% at the January renewals, which was the first decrease seen since the January 2017 renewal period.
Moody’s added: “Generally, pricing was largely stable in working layers – the lower levels of reinsurance used for more frequent and smaller claims.
“However, pricing was lower at the top end of reinsurance programs where there was plenty of capacity available for coverage of less frequent and larger claims, for which pricing remains attractive on a risk-adjusted basis.”
Shifting attention now to the mid-year reinsurance renewals, which particularly focuses on the US, the country has witnessed some heavy nat cat loss activity throughout the last several months.
Moody’s commented: “The upcoming midyear 2025 reinsurance renewals, which focus on the US, will be influenced by large US catastrophe loss events over the past year, particularly Hurricanes Helene and Milton and the Los Angeles wildfires, which are likely to provide support to reinsurance pricing for US exposures.”
Concluding: “Because many renewing US accounts have experienced losses from Hurricanes Helene and Milton and the recent wildfires in California, we think it is likely that US property catastrophe reinsurance pricing will stabilize, supported by the potential for significant price increases for accounts that have had sizeable losses over the past year.”