In its latest report looking over the July 1 reinsurance renewals, Gallagher Re noted that cedants obtained risk-adjusted rate reductions in property lines and were largely able to maintain stable pricing in casualty amid a market characterized by sufficient capacity, including areas with increased demand.
According to the reinsurance broker, carriers entered the renewal period in a strong financial position. A previous report from Gallagher Re cited retained earnings as a key contributor to capital growth, which helped support reinsurer participation in the mid-year placements.
The strong start to 2025 came despite elevated catastrophe activity. Gallagher Re noted that global natural catastrophe losses in the first quarter of 2025 reached at least US$110 billion, nearly double the 10-year average of US$55 billion for the period.
Despite the elevated level of global property catastrophe losses during the opening of the year, these events had a limited effect on the broader renewal results, except in portfolios directly affected by losses.
In casualty reinsurance, results varied depending on cedant actions. Carriers that had adjusted underwriting practices and claims strategies to address loss trends were able to achieve better renewal outcomes. Those that did not demonstrate improvements in performance faced more challenging negotiations.
Specialty lines, particularly cyber, saw a continuation of patterns observed at the Jan. 1 renewals. The cyber segment recorded risk-adjusted rate movements that generally favored buyers and retrocession purchasers.
Gallagher Re reported that total dedicated reinsurance capital reached US$769 billion at year-end 2024, setting a new high. Based on current performance and assuming average results for the remainder of the year, reinsurers are expected to deliver return on equity in the mid-teens for 2025. Traditional capital is projected to grow by approximately 6% this year.
Tom Wakefield (pictured above), global CEO of Gallagher Re, said buyers experienced a more competitive market in the July 1 renewal period compared to recent years, as capacity was available even in areas with heightened demand.
“With these conditions in place, clients had the opportunity to challenge the status quo, and secure improvements to the structure and terms of their property and specialty reinsurance programs,” Wakefield said.
The July 1 renewal followed a trend first signaled in the April 2025 renewal cycle. Gallagher Re reported a shift in market conditions as both property and casualty reinsurance rates showed signs of stabilization.
After multiple years of sustained hardening across key classes, rate movements have become more moderate. Market participants pointed to more predictable loss activity, growing reinsurer appetite, and better alignment between pricing and exposure as factors contributing to this stabilization.
The growth in capital has primarily stemmed from retained earnings within traditional reinsurance firms, rather than new capital infusions or market entrants. Additional support has come from the insurance-linked securities (ILS) market.
In the first quarter alone, non-life ILS assets under management grew by US$4 billion. This supported catastrophe bond issuance totaling US$15.2 billion through June 13, a 36% increase compared to the same period in 2024.
The need for greater risk protection was reinforced by the frequency of large-scale catastrophe events in the prior year. Gallagher Re documented a record 21 insured natural catastrophe events globally in 2024, each resulting in multi-billion-dollar losses. This marked the highest annual count on record.
The events ranged from severe convective storms to hurricanes and floods, impacting multiple regions and lines of business. This elevated baseline of catastrophe activity continues to shape reinsurer pricing models and portfolio strategies entering the second half of 2025.
Looking ahead, Gallagher Re noted that the current reinsurance environment signals a shift toward conditions that benefit buyers, with the balance between supply and demand moving in their favor.
Reinsurers continue to seek opportunities to deploy capital but have done so with a measured approach.
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