Reinsurance buyers generally found ample capacity during the January renewals, reinsurance brokers Aon, Gallagher Re and Howden confirmed in their renewal reports.

Increased reinsurer appetites meant risk-adjusted rate reductions were apparent, and improved terms and conditions for clients that could demonstrate differentiated strategies.

“Overall, capacity was more than adequate for the majority of lines and regions, leading to improved reinsurance pricing and terms for most placements,” according to Aon in its renewal report titled “Reinsurance Market Dynamics – January 2025 Renewal.”

“January 1 renewal activity saw differentiated outcomes for clients. Reinsurers have been able to refine solutions as a result of more effective use of detailed cedent data, a clearer understanding of strategy, evolving views of risk, and application of external data sources,” said Gallagher Re in its report titled “1st View: Differentiation Rewarded.”

“Renewal outcomes are not one size fits all but specific to class of business, geography, performance, strategy, and scale,” Gallagher Re continued.

There were wide ranges of outcomes for ceding companies during the renewals. Buyers with “decent stories” were able to achieve some improvements in rates or terms and conditions, said James Vickers, chairman of Gallagher Re International, in an interview.

“To be honest, during the last two years, some of them felt quite hard done by because they were getting blanket rate increases.” (Editor’s Note: The British idiom “hard done by” means harshly or unfairly treated.)

Previously, buyers found “it difficult to get reinsurers to listen to their stories and the good things that they were doing,” he said, referring to the repricing and reunderwriting of primary carriers’ portfolios that has occurred over the last few years.

In its renewal report, Howden also pointed to ceding company differentiation as an important factor affecting renewal outcomes.

“Client-level differentiation was a key feature of renewals, underlining the need for data transparency and relationships,” said Howden’s renewal report titled “Past the Pricing Peak.”

Risk-Adjusted Rate Cuts

After an extended period of rate increases across the reinsurance sector, the Jan. 1 reinsurance renewals saw rate reductions overall, which reflected “a desire for growth on the part of reinsurers” and heralded “a new phase in the cycle,” Howden said.

“With pricing now falling from a high base, structural changes imposed during the hard market are likely to be more enduring. Higher earnings volatility for insurers looks set to remain a feature in 2025 as they continue to absorb the lion’s share of (elevated) catastrophe losses due to higher attachment points,” Howden added.

In the property-catastrophe segment, Aon said: “Ample capacity and healthy competition led to more flexibility on pricing and terms for property catastrophe at 1/1…”

Aon described the January renewals as “orderly” for property reinsurance business, with rate reductions achieved across the board and in most regions. Reinsurers “were generally more responsive to the needs of insurers and willing to expand their offering,” said Aon, noting that thee largest reductions were achieved by global and large U.S. national insurers, while U.S. regional insurers, which faced challenging conditions in 2023 and 2024, found a more stable market for the 2025 renewals.

“Loss-free programs typically experienced risk-adjusted single-digit decreases on average, compared with single-digit increases in 2024m” according Gallagher Re, explaining that loss-hit programs were more dependent on the circumstances of individual accounts and therefore experienced a wider range of outcomes.

Loss-affected programs on average renewed with increases in the low teens, compared with +35 percent to +40 percent during the January 2024 renewals, Gallagher added.

Howden said global-property catastrophe rates dropped on average by 8 percent, by 13.5 percent for property recession business and by 12.5 percent for global direct and facultative.

In its recently released renewal report, Guy Carpenter said that property-catastrophe renewals saw reinsurance rate reductions of 5-15 percent for loss-free accounts, but there was a range of pricing outcomes that varied by region, attachment point and reinsurer views of price adequacy. In a separate renewal report, Carpenter said that average global and regional property catastrophe rates-on-line decreased during the January 2025 renewals in amounts ranging from 5.3 percent to 7.2 percent.

Hurricanes Not a Factor

Although Hurricanes Milton and Helene were significant natural catastrophes, they were not of sufficient magnitude “to dampen reinsurer appetite for property reinsurance at the 1/1 renewal,” Aon said. “Ample capacity resulted in risk-adjusted price reductions, with reinsurers demonstrating increased flexibility and a willingness to meet the needs of individual insurers.”

“While a sizable portion of losses from Milton was ceded to the reinsurance market, claims elsewhere in the United States were mostly retained by primary carriers. Large natural catastrophe losses in Canada, Europe, Brazil, the Middle East, Caribbean and Asia also had a meaningful impact on local markets,” Howden said.

Attachment Points Hold

“Crucially reinsurers basically held the line on [maintaining higher] attachment points. Yes, the buyers want a lot more in frequency, low level covers. And there are a few more reinsurers who are prepared to provide some sort of solution there,” said Vickers.

But generally, he emphasized that the market has held the line. “They’ve learned the lesson of the last couple of years—that having retentions at a proper level is what is actually driving their profitability,” Vickers said. “So a few points or even 10 points of risk adjusted rate reduction is modest compared to the impact of the change in deductibles.”

Both insurers and reinsurers have benefited from repricing of primary portfolios, the Gallagher Re report indicated.

“Underpinning reinsurance renewal discussions, the non-life primary insurance market has enjoyed the results of several years of improved pricing in the property, casualty, and specialty areas,” Gallagher said. “That repricing of risk, coupled with an elevated interest rate environment, has put the sector in a healthy financial position (some regionals, impacted by frequency losses, being the exception.”

Reinsurers have seen even greater benefits with the increase in primary market pricing “augmented by higher reinsurance prices, tighter terms and conditions, and the major reset in catastrophe attachment points.” Higher attachment points helped to shield reinsurers from 2024’s elevated catastrophe losses, mostly brought by the higher frequency losses of smaller and mid-sized events, Gallagher Re went on to say.

Casualty Reinsurance

“Despite adverse litigation trends and further loss development on soft market years, conditions for casualty reinsurance at 1/1 were stable, supported by ample capacity, high interest rates and a robust underlying rating environment,” said Aon, noting that many excess casualty clients saw an improvement in risk-adjusted margins.

“Renewals for U.S.-exposed international liability and regional U.S. insurers, however, were relatively more challenged, yet capacity was sufficient. With ongoing regulatory and legal developments, forever chemicals were an area of scrutiny, yet reinsurers are willing to work with brokers to avoid blanket exclusions,” Aon added.

“Casualty renewals were marked by differentiation, with outcomes reflecting performance, reserve development and portfolio mix,” said Howden’s renewal report. “Cedent-specific data on pricing, loss cost trends, claims and settlement patterns informed capacity deployments.”

In the U.S., buyers saw heightened scrutiny of litigation risks and loss cost trends, “with outcomes largely driven by individual portfolios’ loss experience, underlying rate changes and reserve development,” according to a Howden press release that accompanied the report.

Cedents that were able to satisfy reinsurers’ criteria around claims development and underwriting performance achieved as expiring or even improved terms, Howden said, noting that renewals proceeded in a relatively orderly manner, with supply and demand dynamics fairly balanced. “International casualty programs continue to perform well and were rewarded with favorable renewals.”

Vickers explained that reinsurers’ opinions on the adequacy of pricing of U.S. casualty varied significantly both by class and by individual ceding company. “And while overall there was enough capacity available and all buyers got their programs filled, within that space of U.S. casualty, there’s a huge variation.”

The January 2025 renewals saw a detailed analytical and underwriting approach where brokers and their clients worked extremely hard with reinsurers to explain what has been happening with their underlying portfolios, how they’re handling their claims and the lessons they’re learning, how they’re managing nuclear verdicts, and how they’re managing social inflation, Vickers said.

Related articles: Reinsurers Open for Business—Even U.S. Casualty, Execs Say; Unite and Conquer: How the Insurance Industry Can Deflate Social Inflation (Reinsurer Vantage Points discussion)

Those ceding companies that do a good job of detailing their casualty portfolio strategies, “were rewarded with better terms and others got a bit worse,” he said.

“But there’s no sign that that market as a whole is settling on an overall consensus of view. And to be fair, I think that’s to be expected because if you actually look at the underwriting results of the primary companies, the gap between the top quartile and the bottom quartile is large,” Vickers stated.

“The reinsurers are getting into the nitty gritty of that and understanding who are the top quartile companies and how they are achieving these top quartile results quarter after quarter; they are rewarding those insurers and being a little bit more wary of the companies who don’t seem to be able to improve their underwriting,” he said.

Related:

• Global Property Catastrophe Rates-on-Line Down 6.6% During Renewals: Guy Carpenter
• Broker Exec Decodes Property Reinsurer Speak: ‘We Want to Grow’
• Moody’s Global P/C Outlook Now Stable Despite Past-Peak Commercial Pricing
• Reinsurers Open for Business—Even U.S. Casualty, Execs Say

This article was previously published by Insurance Journal. Reporter L.S. Howard is the International and Reinsurance Editor of Insurance Journal.