Mid-year reinsurance renewals see capacity swell, buyer power on the rise

Aon, Gallagher Re and Guy Carpenter signal shifting market dynamics favouring cedants—for now.

Despite $70bn in insured losses in H1 and pressures from inflation and litigation trends, reinsurers approached mid-year renewals with strong capital and healthy risk appetite.

Across the board, capacity was not just sufficient — it was abundant. Aon noted that reinsurance supply exceeded demand by over 20%, while Gallagher Re reported a record $769 billion in dedicated capital at year-end 2024, with traditional reinsurers set to grow by another 6% this year. Guy Carpenter’s president and CEO, Dean Klisura called the current environment “one of the most favourable for reinsurers in many years.”

For Bermuda-based reinsurers, many of which have scaled over the past two renewal cycles, the timing couldn’t be better.

Property: A market rebalanced

A clear shift was apparent in property catastrophe. After years of price hardening and tightened terms, reinsurers competed more vigorously for business, particularly on non-loss-impacted programmes, which saw risk-adjusted rate decreases of 5% to 15%, and increases of 10% to 20% for loss-impacted programmes.

This change in tone was especially notable in Florida, where legislative reform helped bring capital back to a previously strained market. Gallagher Re pointed to Hurricane Milton as a “real-world test case” that reinforced confidence in the state’s revised insurance framework.

The appetite wasn’t limited to traditional players. The catastrophe bond market surged, with record issuance exceeding $16.8 billion in the first half, according to Aon, and over $17 billion in cat bond capacity placed across 57 deals, according to Guy Carpenter. Bermuda’s ILS managers were pivotal contributors, reinforcing the jurisdiction’s global leadership in the convergence capital space.

Casualty: selective support in a divided market

Casualty renewals saw cedants demonstrate disciplined underwriting and proactive loss mitigation to secure favourable outcomes, including flat ceding commissions and stable excess of loss pricing. Others, especially those lacking transparency or still struggling with adverse development, faced pushback.

While reinsurers remain wary of nuclear verdicts and social inflation, they are also drawn to the segment’s relative margin potential, bolstered by high underlying rates and the prospect of tort reform in key jurisdictions. According to Aon, capacity remained stable overall, with some carriers reducing their US exposure and others stepping in to fill the void.

Steve Hofmann, US CEO of Aon’s Reinsurance Solutions, said: “The current reinsurance market conditions create opportunities for insurers to address specific issues, or to adjust programme structures and coverage to reduce volatility in both property and casualty.”

Specialty and cyber

Specialty lines, especially cyber, continued on a favourable trajectory for buyers. The reinsurance market showed a willingness to negotiate improved terms and structures, reflecting a more confident outlook. Gallagher Re noted that cyber, in particular, experienced rate improvements in favour of buyers, aligning with broader risk-adjusted reductions across the speciality spectrum.

The Bermuda edge

For Bermuda-based reinsurers and ILS managers, this renewal season underscored their unique positioning. With a capital base that is both agile and diversified, and a proven ability to deploy across traditional and alternative platforms, Bermuda firms were key beneficiaries of the return to competitive dynamics.

More importantly, Bermuda’s appeal to investors, from pension funds backing ILS platforms to private equity supporting new underwriting ventures, ensures it remains a magnet for capital even in a moderating market. As traditional and alternative capacity converges, the island’s integrated model offers reinsurers the flexibility to respond to client needs across a spectrum of structures and risk appetites.

Looking ahead

While reinsurers are still digesting a heavy first-half loss tally, market fundamentals suggest further momentum is likely to follow. Return on equity remains attractive, with industry-wide projections in the mid-teens for 2025. Client demand for risk transfer continues to rise, driven by inflation, shifting perceptions of peril, and regulatory reform. And with more capital flowing into both rated balance sheets and ILS vehicles, the competitive tone is likely to persist — at least until the next major event redraws the map.

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