Reinsurance rates have been on a downward trend this year, particularly during the January renewals. However, experts from Moody’s Ratings predict that prices for US property-catastrophe reinsurance may stabilize during the midyear renewals. This forecast comes after significant loss events in the US, including Hurricanes Helene and Milton, as well as wildfires in Los Angeles, which could help support pricing for reinsurance related to US risks.
According to a report released by Moody’s on March 13, the upcoming midyear renewals in 2025 will likely reflect the impact of these large catastrophe losses. The report suggests that while January 1, 2025, renewals saw moderate decreases in risk-adjusted pricing for property coverage, the overall pricing will vary based on geographic location and whether specific accounts experienced losses in the past year.
Moody’s noted that at the January renewals, US property catastrophe reinsurance pricing decreased by 6.2%. This marked the first decline since January 2017, which ended a lengthy period of soft pricing in the market. The report highlighted that while prices were generally stable for lower levels of reinsurance, they dropped at the higher levels where there was ample capacity for larger claims.
In contrast, European reinsurers reported mixed results. Some, like Swiss Re and SCOR, saw premium growth, while others, like Munich Re, adjusted their underwriting strategies, resulting in a slight decrease in premium volume. Pricing changes among European reinsurers ranged from a small decrease to a modest increase.
Despite the recent losses, the reinsurance sector has remained resilient. Moody’s pointed out that reinsurers have reported strong financial results, thanks in part to higher attachment points for property catastrophe reinsurance. This has allowed them to maintain sufficient capacity to meet market demand.
Overall, the January renewals typically account for a significant portion of a global reinsurer’s portfolio, especially in Europe. As a result, the trends observed in these renewals will likely influence the market as it moves into the midyear renewals. The interplay between recent catastrophic events and pricing strategies will be crucial in shaping the future landscape of reinsurance in the US.