January renewals show upbeat market, capital to rise

Last year was profitable for reinsurers with returns almost reaching 20%.

The market exhibited adequate capacity and a commercial approach, with a 10% increase in dedicated reinsurance capital compared to year-end 2022, Guy Carpenter in collaboration with AM Best, reported.

Despite challenges in some geographies, the renewal period showed improved balance and consistency, resulting in a smoother process compared to the previous year.

Reinsurers, focusing on technical discussions, increased appetite and capacity allocations. The property market saw a more balanced trading rhythm, especially in frequency-exposed layers, with pricing corrections made throughout 2023. 

Proactive discussions on subjects like SRCC, terror, and cyber led to concurrency improvements. Property catastrophe reinsurance rates varied, with non-loss-impacted programs near-flat and loss-impacted programs up 10%-30%.

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In casualty, pressure on ceding commissions and excess of loss pricing was noted, but negotiations were successful with ample capacity once terms were met. 

Differentiating client portfolios and maintaining discipline in risk selection and underwriting measures were key to renewal capacity.

The year 2023 proved profitable for reinsurers, with returns nearing 20%. 

Property retrocessional capacity was available, and the catastrophe bond market had a record year with over $15.2b placed. Large losses for 2023, currently at $94b, may increase as more information becomes available.