By Scott Vincent

June 30 - (The Insurer) - Reinsurers are showing an increasing willingness to provide solutions that help cedants reduce exposure to high-frequency events as they seek to differentiate themselves in a competitive market, Gallagher Re said in its 1st View report on the July 1 renewals on Tuesday.

The reinsurance broker said increased competition at July 1 had led to average risk-adjusted rate reductions of between 10% and 15% for property programs, with casualty renewing broadly flat after a further deterioration in the U.S. liability reserving position over the past year.

This increase in competition has meant that cedants have gained some ground in capping their exposure to high-frequency events, with reinsurers having largely exited these lower layers when market hardening accelerated after Hurricane Ian in 2022.

Gallagher Re said it had been working with buyers to bolster the availability of solutions such as aggregate covers to address frequency losses, with reinsurers showing increasing willingness to consider re-entering the space.

For the moment, the broker said reinsurers remain most receptive to structures that require a peak zone loss to trigger coverage, rather than a larger number of secondary peril losses.

Gallagher Re’s chief commercial officer Lara Mowery told The Insurer that July 1 had trended towards more favourable conditions for buyers than recent mid-year renewals, with many reinsurers eager to deploy additional retained capital.

“Reinsurance market dynamics tend to swing on a pendulum. With adjustments to attachment points and pricing taking place simultaneously within a short window, reinsurers have experienced a period of very attractive results,” she said.

“We are now seeing the pendulum swing back towards buyers, with a bit more flexibility around creating structures that are more beneficial for buyers in the current loss environment.”

“We are now seeing improving appetite from certain reinsurers to work with cedants on structured-type solutions,” she said.

CASUALTY

For casualty lines, Gallagher Re said clients had seen pricing remain broadly flat as underlying pricing increases continue to flow through to reinsurers.

Ceding commissions were largely flat or fractionally down on quota share business, with rates broadly stable in excess of loss, the broker said.

Gallagher Re said there was a clear market divide between cedants that were able to articulate actions they had taken to improve performance, with those unable to evidence how they are tackling performance issues experiencing less favourable renewal outcomes.

“Casualty pricing held broadly flat but there was a clear bifurcation in the market for cedants that have undertaken significant remediation steps.

“Those that were able to provide good data to demonstrate these steps were differentiated through the renewal process,” Mowery said.