Global property catastrophe limit purchased increased an estimated $35-$40 billion through H1 2024, with more than 50 percent of increased limit originating in North America across a wide range of companies, according to the newly released Mid-Year 2024 Market Insights Update: Guy Carpenter’s Estimate of Additional Global Property Catastrophe Limit Purchased.
The increase represents an estimated 5-10 percent of catastrophe capacity purchased, including cat bonds.
In North America, over 60 percent of property catastrophe contracts included expanded limit with the top 20 percent purchasing in excess of $100 million of additional limit, the report stated.
The report highlights how a transitioning reinsurance market is meeting demand in a dynamic trading environment.
Capital from traditional reinsurers, calculated using the Guy Carpenter Reinsurer Composite Index, increased over $35 billion by year-end 2023 versus 2022, with retained earnings a significant contributor, providing increased capacity available to fulfill increased demand, analysis showed.
Reinsurer profitability improved going into 2024, the result of corrections in pricing and attachments points, incentivizing reinsurers to utilize increased levels of capital in property catastrophe.
Risk-adjusted pricing trended down by mid-year, particularly on middle and upper layers, giving buyers greater ability to increase purchases.
It was a record H1 for catastrophe bonds, the report noted, as investors sought opportunities to participate in improved market conditions.
Demand is likely to remain somewhat elevated in 2025, as a result of increased property values, exposure growth and risk mitigation focus, the report stated.