By Henry Gale

June 30 - (The Insurer) - The Insurer examines five key talking points from the mid-year reinsurance renewal commentary from Aon, Gallagher Re, Guy Carpenter and Howden Re.

• Property market softens even as demand grows

• Capacity returns to Florida

• Terms and conditions nudge towards buyers

• Muted impact from California wildfires

• Casualty outcomes shaped by differentiation

1. PROPERTY MARKET SOFTENS EVEN AS DEMAND GROWS

"Reinsurance capacity was more than sufficient to absorb a near 10% increase in global demand for property catastrophe limit," Aon said.

Guy Carpenter put the increase in demand for property cat limit at 5-7%, which it agreed was "easily absorbed" by reinsurers. In fact, reinsurer capacity exceeded demand by more than 20%, it said.

Gallagher Re said cedants achieved risk-adjusted rate reductions of around 10-15% on average for property business.

Guy Carpenter said non-loss impacted property cat programs had rate decreases of 5-15%, while loss-impacted programs saw rate increases of 10-20%.

"Top layers experienced the most competitive pricing, with some rate reductions greater than average as a result of surplus ILS capacity," Howden Re said in its June 1 property cat renewals report.

The first half of 2025 has seen more cat bond issuance than any previous H1, with Guy Carpenter putting total issuance at approximately $17 billion so far.

This was partly driven by inflows at ILS investment managers putting pressure on spreads, making cat bond pricing attractive compared to traditional reinsurance.

ILS capacity also influenced the retrocession market, which Gallagher Re described as continuing to tilt in buyers' favour.

"A significant softening of the catastrophe bond market, coupled with increased supply, pushed pricing further downwards on tail-exposed excess of loss covers, including some softening in minimum rates-on-line," it said.

"The absence of any major attaching or collateral-trapping loss to the retro market, including minimal impact from Helene and Milton and the California wildfires, has supported strong profitability across the segment," Aon said.

It also noted that price improvements were most dramatic where products overlapped with the cat bond market.

Property market softens

2. CAPACITY RETURNS TO FLORIDA

Legislative changes have proven successful in reducing insurance-related litigation in Florida, Gallagher Re said, which was among the reasons why some of the capacity that left the state in recent years returned at these renewals.

"These reforms have successfully reduced property litigated claims by a substantial margin," the broker said, adding that reinsurers had gained increased confidence in the Florida market.

"The market's performance following Milton and Helene gave reinsurers confidence in the changing fortunes for Florida's property insurance market going forward," Aon said, adding that capacity was more than adequate to meet demand.

Demand for property reinsurance in Florida also increased at this year's renewal, with Howden Re citing the continued depopulation of the state's windstorm insurer of last resort Citizens and the launch of new domestic carriers.

FLORIDA SHIFTS FROM PROBLEM CHILD TO GROWTH OPPORTUNITY

3. TERMS AND CONDITIONS NUDGE TOWARDS BUYERS

June 1 property catastrophe programs, Howden Re said, "generally attracted subscriptions above 100%, enabling cedants to negotiate against the stringent terms and conditions that defined mid-year placements in recent years".

Gallagher Re said the softening property conditions and broadly flat outcomes in casualty gave cedants "the opportunity to challenge the status quo, and secure improvements to the structure and terms of their property and specialty reinsurance programs".

One of their priorities, the broker said, was to cap their maximum exposure to high-frequency events.

"With no shortage of capacity, reinsurers are seeking ways to differentiate themselves and are showing increased willingness to consider re-entering and innovating in this space," Gallagher Re said.

"For the moment, they remain most receptive to structures that require a peak zone loss to trigger coverage."

Reinsurers showed flexibility to consider expanded coverage, Aon said, and were "more willing to support program structures and products that were not on the table even six months ago."

Signs of increased availability of frequency cover

4. MUTED IMPACT FROM CALIFORNIA WILDFIRES

While the California wildfires in January drove Q1 insured losses to their second-highest level ever, according to Aon, the reinsurance market remained resilient.

Gallagher Re said the loss activity "did not meaningfully impact the positive shift in mid-year renewal negotiations".

Reinsurers' interest in property cat business in the Pacific North West increased, the broker said, although wildfire coverage "remained a headline challenge."

"While we are not seeing fundamental changes to terms, some loss occurrence definitions are being pushed largely in response to the Q1 wildfires in California."

The Palisades and Eaton fires were separate fires with separate ignitions and there has not been consensus as to whether they should be considered as one or two events from a reinsurance perspective.

Aon said reinsurers continued to support the California market at renewals, "albeit with an increased focus on wildfire exposure management and reinsurance terms".

It said the wildfires absorbed around 30% of the annual catastrophe allowances of the largest and most diversified reinsurers, while smaller companies faced a more significant impact.

Guy Carpenter said it did not expect the wildfires to impair reinsurers' capital or appetite for the remainder of the year.

5. CASUALTY OUTCOMES SHAPED BY DIFFERENTIATION

Reinsurance brokers reported a broadly stable rate environment for casualty lines at the mid-year renewals, but continued to see varied outcomes driven by differentiation, also observed at the recent January renewals.

"For cedants unable to provide evidence on how they are tackling the performance issues, outcomes were less favourable," Gallagher Re said.

Aon said insurers "will need to demonstrate price adequacy, diligent underwriting and exposure management, as well as close cooperation between claims and underwriting."

"Supply and demand remained in balance," Aon said, as reinsurers' appetite varied.

"Attracted by strong underlying rates and underwriting actions taken in recent years, a number of reinsurers have deployed additional capacity to casualty lines, offsetting a contraction in capacity from reinsurers with losses from soft market years."

Guy Carpenter said ceding commissions on proportional casualty placements "generally renewed flat to slightly down", while excess of loss rates increased by 10-20%.

Reinsurers' concerns persist over casualty but continue to support market