Aon reports competitive but positive mid-year reinsurance renewals
Broking giant Aon has reported that the June and July mid-year 2024 reinsurance renewals saw heightened competition from markets, helping to drive a much more positive outcome for reinsurance buyers than a year ago.
Property catastrophe reinsurance renewals saw rate reductions and improvements in terms and coverage, Aon reports, helping insurers complete towers much more efficiently than last year.
However, it’s not all smooth going and Aon explained, “While a more competitive reinsurance marketplace was observed, the landscape remains somewhat dynamic due to volatility in secondary peril losses in property, heightened Atlantic hurricane season forecasts, social inflation and adverse reserve development in casualty.”
Demand for catastrophe reinsurance in the United States has helped to soak up some of the competition, with Aon estimating that $5 billion more in limit was purchased.
Going on to explain, “Renewals on June 1 and July 1 continued to build on the positive momentum of the January 1 and April 1 renewals, with increased appetite from traditional reinsurance and ILS markets resulting in downwards pressure on pricing for both U.S. nationals and Florida specialist insurers – the latter experiencing rate reductions for the first time in three years.
“Meanwhile, renewals in Latin America and the Caribbean were also broadly positive for insurers, with ample capacity to meet demand and risk-adjusted flat, to single-digit rate increases. Insurers in Australia and New Zealand also experienced stable market conditions, as around 80 percent of their property catastrophe reinsurance business renewed at mid-year.”
Aon also noted the profitability levels in the reinsurance market, saying that through the first-quarter of the year traditional reinsurers were “generating robust returns by historical standards,” as their annualised returns on equity (ROE) averaged around 20 percent.
Steve Hofmann, co-president of U.S. Reinsurance Solutions at Aon, commented, “We are pleased to see the ongoing stability of the reinsurance market, which now presents profitable growth opportunities for both insurers and reinsurers. Over the past 18 months, we have advocated for this balance on behalf of our clients by introducing additional risk transfer capacity, and launching new technologies to enhance risk assessment and management.”
Kevin Traetow, co-president of U.S. Reinsurance Solutions at Aon, added, “Indeed, the ability to make quicker, data-driven decisions provides our clients with the clarity and confidence needed to navigate the market effectively.”
Also read: Alternative capital hits $110bn mid-year high as reinsurance grows in 2024: Aon.
