Insurers retain catastrophe risk as new capital enters reinsurance sector

Since 2022, about $35b of new capital has entered the sector.

Whilst profitability has improved, reinsurance cedents are retaining more risk, with 62% of modelled natural catastrophe exposure kept on their books as of January 2025, according to Howden Re.

Howden Re’s report, Who dares wins: Innovation in an era of hard market softening, warning that reinsurers must innovate and diversify as rates ease from recent highs.

Since 2022, about $35b of new capital has entered the sector, mainly through insurance-linked securities, though new start-ups remain scarce. Casualty lines continue to face pressure from litigation and social inflation, especially in the US.

Howden Re said growth will depend less on pricing momentum and more on tools such as parametric triggers, aggregate covers, and expansion into areas like cyber, renewables and emerging markets.