Reinsurance capacity can handle April & mid-year, but can’t ease rate
Reinsurance treaty renewals should prove orderly at both the April 1 and mid-year deadlines with capacity sufficient to meet rising demand, but with no new capital entering the market that might provide cedents with rate relief, a leading reinsurance official of global brokerage group AJ Gallagher has said.
Gallagher sees “limited new capital entering the market, so we are not expecting much change in reinsurance market conditions in 2024,” AJ Gallagher president Tom Gallagher told a meeting with equity market analysts.
For both the Asia-focussed 4.1 treaty renewals and the chiefly southeast US wind renewals with mid-year deadlines, Gallagher expects “increased demand for cover being met with adequate supply,” Gallagher said.
The 4.1 renewals should escape excess price pressure following Japan's New Year’s earthquake on the Noto peninsula, Gallagher suspects. He cites five years of uninterrupted rate increases for the Japanese market and suspects that rate hikes, to the extent they surface, may be only “some modest movement in pricing that is reflective in individual buyer exposures”. Japanese names with North American property exposure could also face some scrutiny, he said.
For US mid-year renewals, Gallagher has his eye on the introduction of the new cat model update from RMS which “is likely to increase modelled losses” for the swathe of risks to the Gulf and Atlantic hurricane. While the “orderly” nature of the 1.1 renewals will be continued and the supply-demand balance will hold, it is otherwise “still too soon to make any concrete predictions”.
For AJ Gallagher, tapped into the reinsurance market via its global reinsurance brokerage Gallagher Re, organic broker revenue growth is likely to hit a low double digit annual growth rate in Q1, Gallagher said.
Operationally, Gallagher Re is building its own capacity in the direct and facultative space with hiring across the globe and is further continuing to reach for the cross sell across divisions throughout the Gallagher group, Gallagher said.
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