Reinsurance renewals news

US primary insurance firm Travelers has renewed its occurrence catastrophe excess-of-loss (XoL) reinsurance treaty at a higher attachment point, but the carrier appears not to have renewed its aggregate catastrophe cover, a possible reaction to market conditions and pricing.

While the recent reinsurance renewals saw significant ground recovered on pricing and terms, a number of challenging themes remain and the industry must address systemic risk themes to attract enough new capital to meet significant demand, Mike Mitchell of Swiss Re has said.

The UK’s Prudential Regulation Authority (PRA) of the Bank of England has warned that general insurers may fare worse in their stress tests, after the hardening of reinsurance and retrocession pricing is expected to drive more retained losses.

Hurricane Ian was an important test for the profitability of the global insurance and reinsurance market, according to analysts at Goldman Sachs and their comments read-across positively for the insurance-linked securities (ILS) market as well, as returns there also show the “strength of the cycle working through.”

Members of the Board of the Texas Windstorm Insurance Association (TWIA) expressed concerns over the potential cost of catastrophe bond coverage in 2023, having an expiring $400 million cat bond it wants to renew as part of a target to buy up to $2.92 billion of reinsurance for the coming storm season.

New capital that enters the reinsurance market in 2023 is expected to be rewarded, thanks to strong demand for protection and the attractive terms that capital can be deployed at, according to Joe Monaghan, Global Growth Leader at Aon’s Reinsurance Solutions.

One of the world’s largest reinsurance buyers the California Earthquake Authority (CEA) has had its ratings downgraded because its claims paying capacity has been reduced, with lack of reinsurance one of the driving factors.

Home insurtech Hippo has renewed its reinsurance program for 2023 and its executives say the terms secured were improved year-on-year, which could be related to it having another year under its belt and an expanded book of business, providing more confidence to its reinsurers.

The Australian Reinsurance Pool Corporation (ARPC), which administers Australia’s terrorism insurance scheme, has renewed its retrocessional reinsurance program to provide $3.5 billion of coverage for 2023, as a multi-year retro purchase in 2022 proved beneficial as it navigated the harder market this year.

The global reinsurance market currently feels like one where the reinsurers are “firmly in control” and there is no sign of them letting up on pricing, leading analysts at JMP Securities to suggest the hard market conditions have legs beyond 2023.