Reinsurers Expand Capacity Amid Growing Property Catastrophe Appetite

The appetite for property catastrophe reinsurance renewals has surged, with reinsurer interest increasing by 10% to 15%, while demand grew by only 5%, according to a report from Guy Carpenter. This imbalance led to consistent oversubscription in renewals. Key factors driving this growth include a profitable 2024, marked by average returns on equity of 17.3%, and a 6.9% increase in total dedicated reinsurance capital, now reaching $607 billion.

Non-loss-impacted property catastrophe renewals saw risk-adjusted reinsurance rate reductions of 5% to 15% at the January 1 renewals, reflecting market optimism and disciplined attachment point practices. Loss-impacted layers in regions like the US, Europe, and Canada experienced capacity adequacy, with rates ranging from flat to a 30% increase.

Catastrophe bonds also saw strong performance in 2024, with $17 billion in limits placed across 67 issues. Casualty reinsurance faced challenges, particularly in proportional structures and excess liability placements, yet transparency in client data improved treaty terms. The cyber reinsurance market remained innovative, with buyers seeking blended solutions. Reinsurers and cedents continued fostering holistic partnerships to navigate diverse property and casualty market conditions.