Fundamental Shifts and Enduring Truths
The January 2023 renewal marks a turning point for the reinsurance market, signaling a new reality for buyers. It was the most challenging January 1 renewal in a generation as the reinsurance market underwent a fundamental shift in pricing and risk appetite, especially for property catastrophe risk.
Five Things You Need to Know
1 Following six years of underwhelming returns and above average catastrophe losses, and faced with changing investor sentiment, the reinsurance market took action to put itself back on an even keel.
2 Pricing for U.S. property catastrophe and global property retrocessional business hit multi-decade highs at January 1.
3 Aon estimates that global reinsurer capital declined by 17 percent, or $115 billion, to $560 billion over the nine months to September 30, 2022.
4 The cat bond market grew year-over-year (as measured by limit outstanding); issuances outpaced maturities by $2.2 billion, or roughly 7 percent, consistent with the growth seen in 2021.
5 We see opportunities for diversification and growth beyond renewal, spanning the agriculture market, the U.S. mortgage reinsurance market which had a record year, and the robust casualty and specialty reinsurance markets should remain attractive.