Fitch Ratings has released the results of reinsurance market survey, which saw 81 re/insurance market participants provide their expectations for the January 2025 reinsurance renewals.
Fitch believes reinsurers are well positioned to maintain their strong property-catastrophe profitability, even with prices easing, and expects underlying margins to remain close to their 2023–2024 peak in 2025.
Capital buffers and reserve adequacy have strengthened, helped by record profits in 2023 and 1H 2024.
Market estimates of property catastrophe losses in 1H 2024 are just over $60 bn, significantly higher than average, driven by medium-sized peril events, including several convective storms in the US.
Most of the losses were absorbed by primary insurers due to higher attachment points, a situation that will persist in 2025 as reinsurers stay cautious on secondary peril exposure. Climate change brings more frequent and extreme weather activity, making it harder for reinsurers to price catastrophe risk.
Global Reinsurance Forecasts
| (USDbn) | 2024F | 2025F |
| Net premiums written | 173.4 | 183.8 |
| Catastrophe losses | 14.3 | 16.4 |
| Net prior-year favourable reserve development | 3.3 | 1.8 |
| Calendar-year combined ratio (%) | 88.2 | 90.2 |
| Accident-year combined ratio (%) | 90.1 | 91.2 |
| Accident-year combined ratio excluding catastrophes (%) | 81.8 | 82.2 |
| Shareholders’ equity (excluding Berkshire Hathaway) | 266.7 | 280.0 |
| Net income return on equity (excluding Berkshire Hathaway) (%) | 20.7 | 18.9 |
Reinsurance market players are divided on whether price increases at the key January 1st renewals will be strong enough to properly account for increasing loss trends in the property catastrophe space.
- More than 50% of respondents expect global reinsurers to raise prices
- 30% expecting increases of more than 5%
- 26% predicting price rises of less than 5%
- 22% of respondents expect pricing to be flat
- 12% see price reductions of less than 5%
- 10% see price cuts of more than 5%
- 39% stating that property cat price rises in this line would be sufficient to compensate for increasing loss trends
- 36% saying they wouldn’t, and 25% being unsure
Fitch Ratings believes the cycle has passed its peak, and ultimately foresees a softer reinsurance market in 2025 amid an abundance of capital.
Reinsurers are set to uphold the structural changes made recently and show no intention of increasing exposure to secondary perils, which continue to drive insured losses each year.
Fitch’s survey asked which business lines will offer the best margins for the 1/1 renewals, with mixed responses:
- 25% favored property
- 21% property catastrophe
- 20% specialty/other
- 18% motor
- 16% casualty
The low interest in casualty isn’t surprising, given some negative prior-year developments reported during H1 2024 earnings.
Fitch expects reinsurers to push for double-digit rate hikes in US casualty at renewals, alongside cuts to cover and quota-share commissions.
Renewals in January 2025 could be challenging and potentially delayed. It will be key to see how supply and demand balance in property catastrophe and other areas, as reinsurers aim to keep the discipline and profitability seen over the last 18 months, while buyers try to offset losses from secondary perils amid the uncertainty of climate change.
by Yana Keller
