Reinsurance pricing favorable at April 1 renewals: Aon
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Pricing was favorable for U.S. insurers renewing reinsurance coverages on April 1, as some took the opportunity to purchase significantly higher limits amid adequate capacity, according to a report released Wednesday by Aon PLC.
Although April is a relatively light renewal for U.S. insurers, several large national and global companies renew during the cycle.
The results are a positive harbinger for mid-year reinsurance renewals at June 1 and July 1, discussions for which are already underway, Aon said.
“Earlier renewal discussions are happening on a significant number of U.S. midyear renewals, with reinsurers ready to provide indications and lock in capacity. There is a broad desire amongst catastrophe reinsurers to write larger lines in 2024, and supply will be available for insurers looking to purchase additional limit,” the report said.
The ample capacity should lead to greater price competition, Aon said, along with improvement and greater consistency in terms and conditions.
One key development driving the improved capacity and risk appetite among reinsurers is the rebound in global reinsurer capital to $670 billion at the end of 2023 from $575 billion at the end of 2022, much of which has come from robust reinsurer earnings.
Mike Van Slooten, head of business intelligence for Aon PLC’s reinsurance solutions division in London, said, “The biggest form of new capital is the earnings being generated by the established companies … a decent chunk of which is going to get redeployed into the market.”
