Property-catastrophe reinsurance pricing saw continued moderation at the June 1 renewals with a selective return of c
apacity following historic pricing strength, according to Howden Re, the reinsurance and advisory arm of Howden.
While rate moderation continued and reinsurers’ appetite expanded,
“underwriting rigor persisted, especially in structurally challenged layers,” said Howden Re’s June 1 renewal report.
Risk-adjusted rate-on-line changes ranged from flat to down 20 percent, depending on loss experience and a
ttachment point, the report said, noting that, despite pricing pressures, programs generally attracted subscriptions above 100 percent.
Renewals in Florida were marked by increased appetite from tra
ditional reinsurers, which appeared confident in litigation reforms and viewed pricing as attractive after years of caution, the report indicated.
Figure 1: Risk-adjusted property-catastrophe reinsurance rate-on-line index at June 1. Source: Howden Re
Property-Catastrophe XoL
In the property-catastrophe excess-of-loss (XoL) reinsurance m
arket, capital inflows have rebounded, with newly formed reinsurers and syndicates deploying meaningful capacit
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y into mid-year placements, the report confirmed.
“As such, expanding supply continues to outpace rising demand, underpinned by improved reinsurer retained earn
ings and sustained catastrophe bond activity, including the issuance of new and upsized transactions at the
upper layers of reinsurance programs,” Howden Re continued.
As a result, the brok
er said, remote-attaching cat-XoL layers have experienced rate reductions in the range of 10-20 percent.
Blended risk-adjusted property-catastrophe XoL rates-on-line wer
e down 10 percent, with loss free programs down 10-15 percent on a weighted average basis, the report said.
“The dynamic this year was neither a continuation of 2023’s dislocation nor a broad softening. Rate levels remain histo
rically high but are now outpacing loss trends in many areas,” said Kyle Menendez, managing director, Howden Re, North America, in a statement. “This is drawing more interest from markets, including Lloyd’s syndicates with previously cautious balance sheets looking to grow incrementally.”
Layered Outcomes
Howden Re said outcomes for buyers were mixed across towers with top layers experiencing the most competitive pricing, with some rate reductions greater than average as a result of surplus capacity from the insurance-linked securities sector.
“Cedents purchasing multiple layers or products on a concurrent basis found greater support from reinsurers willing to underwrite holistically rather than transact tactically,” the report said, explaining that reinsurer support extended to property per-risk XoL placements, alongside a resurgence in aggregate or second and third event covers.
“In addition to traditional occurrence protection, cedents are evaluating, and increasingly attracting, capacity for sideways and aggregate structures, as reinsurers respond to heightened cedent demand for coverage that addresses the frequency of catastrophe events,” Howden Re said.
Brian McKeon, managing director, Howden Re, commented: “Reinsurers are being deliberate. We’re seeing evidence of measured growth, especially from those carriers that had stepped back in recent years. More reinsurers support full programme structures, especially where multiple property products are purchased at the same inception date, in the hope of influencing catastrophe occurrence signings.”