According to analysts at Morgan Stanley, property and casualty (P&C) reinsurance pricing is set to decline heading into January 1 renewals, barring any significant catastrophic events.
The outlook for the 2025 reinsurance market reflects a softer pricing landscape, influenced by a relatively calm 2024 and manageable risks from this year’s hurricane season. Reinsurers have delivered strong underwriting results throughout the year, but recent capital return announcements and market dynamics suggest pricing power may weaken.
Analysts noted that capital returns from major players like Arch Capital and RenRe were insufficient to absorb excess capital, potentially signaling a shift towards a softer market. Despite the ongoing hurricane season, with Hurricane Milton anticipated to impact the fourth quarter, reinsurers such as Everest, Hamilton, and RenRe expect these losses to remain within manageable levels.
While investor sentiment has cooled towards reinsurance as the year ends, disciplined underwriting, solid attachment points, and stringent terms & conditions leave reinsurers well-positioned to navigate potential catastrophe losses. Morgan Stanley maintains an “Overweight” rating on Arch Capital and Everest, viewing them as undervalued despite strong recent performances.
The key focus for the industry moving into 2025 will be on the pricing dynamics for the January 1 renewals, with analysts continuing to back Arch and Everest amid market uncertainty.