Reinsurers lean in at hard mid-year renewals: Gallagher Re CEO Wakefield
Reinsurance firms took the opportunity to deploy more capital at the mid-year renewals, while the ILS market is seeing increasing interest, as returns improved and investor appetite recovers, according to broker Gallagher Re’s CEO Tom Wakefield.
Commenting on the mid-year renewals, Gallagher Re’s CEO Tom Wakefield said that, “With the improved terms and conditions available in the reinsurance market, some existing reinsurers are leaning into the hardening market, committing more of their existing capital, as well as any new capital they are raising, to reinsurance.”
But he further explained that this isn’t a typical hard reinsurance market environment, with capital still more limited than you might expect by this stage of the cycle.
Wakefield said that, “In contrast to other historic hard markets, there are limited signs of completely new reinsurance entities forming and the current trend is one of consolidation into fewer, larger reinsurance entities – which, in the absence of any major losses, points towards pricing stability.”
Gallagher Re reported this morning that the mid-year reinsurance renewals saw “a continuation of the pricing and structural market dynamics that defined the 1/1 renewal period.”
The broker noted that mid-year reinsurance placements saw the market “catching up and aligning with prevailing market undercurrents.”
As a result, those buying reinsurance at the mid-year saw “significant increases on a year-on-year basis,” but the market was overall orderly, Gallagher Re explained, with adequate capacity available to service cedents.
Because of this, the mid-year reinsurance renewals process was “less-stressed” for most buyers.
Reinsurers sought to bring terms and conditions into line with those transacted at in January and April, driving increased retentions.
Purchases of additional limit are seen as minimal by Gallagher Re, and this alongside clearer expectation management meant that with some new capital entry and only moderate demand increase, the renewal season was more orderly.
In addition, Gallagher Re noted that we aren’t seeing a new Class of 2023, in terms of new reinsurance entities, despite the continued hard market.
Rather, the trend is one of consolidation into fewer, larger reinsurance entities, Gallagher Re said, which the broker believes, in the absence of any major losses, points towards a greater chance of prolonged pricing stability.
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