Reinsurers set to achieve sub-90% combined ratios: Gallagher Re

The property catastrophe market saw reduced risk-adjusted pricing.

1 January renewal activity revealed varied results for clients as reinsurers utilised improved cedant data, refined strategies, and external data sources to deliver tailored solutions, according to Gallagher Re. 

The non-life primary insurance sector remains robust due to several years of improved pricing in property, casualty, and specialty lines, alongside higher interest rates. 

This has bolstered reinsurers’ positions, further enhanced by higher reinsurance pricing, stricter terms, and a significant reset in catastrophe attachment points.  

Reinsurers are projected to achieve a combined ratio near or below 90% and a return on equity in the low teens for 2024.

Strengthened balance sheets and enhanced performance metrics have fueled confidence amongst reinsurers, leading to increased risk appetite.  

The property catastrophe market saw reduced risk-adjusted pricing due to abundant capacity and strong 2024 results. 

Whilst terms largely stabilised, catastrophe program attachment points remained steady, reflecting continued discipline. Reinsurers increasingly provided structured and traditional support for lower-level protections.  

Specialty markets, including aviation, cyber, and marine & energy, benefited from favourable conditions and abundant capacity. 

However, specific claims activity, such as the Baltimore Bridge loss and aviation leasing litigation, tempered potential gains. Notably, the cyber market experienced growth in alternative capital, with six cyber catastrophe bonds issued, totalling $785m.  

Investment in catastrophe bonds and collateralised reinsurance is expected to grow in 2025, bolstered by favourable returns and reduced spreads. 

Whilst recent pricing trends reflect market adjustments, profitability assessments remain complex, emphasising the importance of detailed methodologies in evaluating risk.  

The renewal period demonstrated the importance of preparation and strategy in navigating the increasingly complex landscape, setting the stage for targeted growth in 2025.