Aon: April Renewals Herald Buyers’ Market with Ample Property Cat Capacity

A property catastrophe market in transition suggests a buyers’ market at April reinsurance renewals, according to broker Aon.

Source: AM Best | Published on April 1, 2024

April property cat renewals

A property catastrophe market in transition suggests a buyers’ market at April reinsurance renewals, according to broker Aon.

Following a challenging period for cedents, market conditions since the Jan. 1 renewals continued to favor reinsurance buyers with a dramatic shift toward ample property catastrophe capacity, Aon said in a statement. The shift is driven by attractive levels of risk-adjusted returns seen over the past year.

Aon said its full report on April 1 renewals, a key period for the Asia-Pacific region, will be published April 2.

“The April 1 reinsurance renewals were more predictable and generally favorable to reinsurance buyers,” said George Attard, chief executive officer, Asia-Pacific, Aon Reinsurance Solutions, in a statement. “As mid-year renewals get under way for the catastrophe-exposed markets of Florida, Australia and New Zealand, reinsurers are indicating a strong appetite for catastrophe risk.”

Attard said Aon expects the positive trend of the January and April renewals to continue at mid-year renewals, with adequate capacity for property catastrophe risks and enhanced pricing competition. Insurers looking to buy more limit will also find adequate capacity, he said.

The broker said its analysis shows earlier renewal discussions are under way “on a significant number of U.S. mid-year renewals, with reinsurers ready to provide indications and secure capacity.”

Swiss Re Chief Executive Officer Christian Mumenthaler earlier said Jan. 1 renewals were stable and he expects similar trends in renewal seasons for the rest of 2024 renewals rest of year. There was more capacity at Jan. 1 than the previous year, which had a measure of panic,
he said, adding he is unaware of increased demand/

Aon forecasts as much as $7 billion of added demand from U.S. insurers for property catastrophe limit at the mid-year renewals as programs keep pace with inflation and evolving views of risk, and from a resurgent Florida market.

In its tracking of 51 Florida-focused personal lines property insurers, Aon said, for the first time in four years, a positive underwriting income is being generated with an almost $900 million improvement in new underwriting margin for 2023.

About 60% of Asia treaty business renews at April 1, and the renewal round also has global significance as some of the world’s largest catastrophe programs renew in Japan, as well as large portfolios of business renewing  in South Korea, China and India.

Property catastrophe renewals in Japan reinforced positive trends seen in the United States on Jan. 1, with pricing flat to slightly down. South Korea, China and India also saw increased competition for catastrophe business, to varying degrees, Aon said.

Pricing was broadly flat for property catastrophe reinsurance while certain Asia-Pacific markets and lines remained challenged and subject to a tightening in terms and conditions, including property per-risk reinsurance, industrial fire accounts, certain natural catastrophe loss-affected regions and U.S. exposed casualty treaties, Aon said.

April 1 is a major renewal date for facultative reinsurance, a risk transfer solution that is not utilized broadly across Asia-Pacific, according to Aon. Reinsurers showed increased appetite for facultative business at April 1, while new players such as managing general agents continue to enter the market.

Aon said April 1 is also key for renewals in India, with new opportunities for reinsurers given India’s forecast position as the fastest growing insurance sector of all G20 countries over the next five years.