Global: Dynamic trading environment meets reinsurance demand
Source: Middle East Insurance Review | Oct 2024
According to Guy Carpenter, the reinsurance market is characterised by reinsurers’ strong profitability in 2024 and growing capitalisation, which is expected to continue into 2025.
Examining the current data on the reinsurance market’s capital positions, Guy Carpenter and AM Best jointly project a 9% increase in dedicated reinsurance capital, rising to $620bn in 2024. Catastrophe bonds had a record first half of the year, with 2Q being the most active quarter recorded to date. By June 30, 51 different catastrophe bonds had been brought to the 144A market for approximately $12.2bn in limit placed, taking the total outstanding notional amount to more than $45.2bn.
“The market has ample capacity and reinsurers are motivated to engage with cedents,” said Guy Carpenter president and CEO Dean Klisura. “Our clients are seeking to differentiate themselves in this marketplace and leverage strategic trading relationships.”
Guy Carpenter’s business leaders addressed the market outlook for 1 January 2025 reinsurance renewals at a virtual media briefing ahead of the Monte Carlo Rendez-Vous.
Guy Carpenter chairman David Priebe noted that risk appetites continued to improve through the first half of 2024, with underwriting discipline remaining. Building on mid-year momentum, “this current trading cycle is marked by engaged stakeholders actively coming to the table to provide critical capital and financial support to the economy,” he said.
In discussing the property and casualty reinsurance market outlook, Guy Carpenter’s executives noted that after a historic reset in property pricing, programme retentions and coverage in 2023, 2024 have been characterised by a more orderly trading environment, which is expected to continue in 2025, presuming no major Nat CAT loss activity for the rest of the year. Casualty renewal negotiations are expected to continue to focus on underlying rate environment and portfolio performance. Programmes are expected to complete with adequate capacity but with continued scrutiny across sublines. M