aggregate

A few signs emerged at the recent January 1st 2024 reinsurance renewals that bode well for protection buyers as we move through this year and into the next, as broker Aon highlighted that appetite is returning for some of the more challenged products and areas of the tower.

With attachment points still higher across the global reinsurance and retrocession markets, the effect of retaining more risk on balance-sheet is anticipated to drive an upwelling of demand for lower-layer catastrophe covers, according to analysts at Goldman Sachs.

Over the second-half of 2023, the catastrophe bond market has continued in its shift away from providing aggregate cat bond coverage, with the percentage of the outstanding cat bond market that aggregate deals contribute falling below 42% for the first time in years.

The catastrophe bond market needs to price appropriately for so-called secondary perils and stop giving them a “free-ride”, as there is a need to continue offering this type of typically frequency or aggregate style reinsurance protection, but investors must be adequately compensated for it, Tenax Capital has said.

Recent results from major Italian primary insurance companies have clearly evidenced that reinsurance terms, conditions and higher attachments are driving higher retention of catastrophe losses, eroding insurer performance, Fitch Ratings has highlighted.

Property catastrophe reinsurance capacity is expected to remain relatively flat at the January 2024 renewals according to a survey from broker Gallagher Re, which also suggests that reinsurer appetite for writing aggregate coverage and lower-layers remains limited.

Concerns are being voiced over the way reinsurance capital has moved further away from secondary perils, as well as the reduction in available aggregate coverage, which perhaps led Aon to state in a recent report that this is a critical area where innovative efforts may be able to fill some of the reinsurance protection gaps […]

Canadian property and casualty insurer Definity Financial Corporation has utilised the full limit of its aggregate reinsurance cover after losses from multiple catastrophe events in the country, with the wildfires in British Columbia having the largest impact.

One of the interesting trends seen in the catastrophe bond market through recent years and a clear reaction to loss activity experienced, is the shift away from aggregate cat bond coverage, back towards per-occurrence structures becoming the more dominant form seen.

In the global retrocessional reinsurance market, the availability of aggregate covers had been shrinking for some time, but at the January 2023 renewals aggregate retro capacity supply shrank further, while the terms of protection continued to become more restrictive, broker Gallagher Re has said.