The reinsurance market was fairly stable heading into the July 1st, 2024, renewals, and is now more balanced than it was a year ago, although reinsurers are holding the line on retentions, according to James Vickers, Chairman, Gallagher Re International.

Reinsurance News spoke with Vickers around the launch of reinsurance broker Gallagher Re’s 1st View report, to hear his thoughts on market dynamics through the mid-year renewals and beyond.

“We need to remember that this is the first renewal after we’ve closed Q1. And obviously, Q1 2024 for reinsurers has been almost more fantastic than Q1 2023and the full-year 2023 results. So, results are very strong for reinsurers,” said Vickers.

While Q1 and Q2 2024 were not without catastrophe losses, none of the events were especially large as they came from so called secondary perils, so had modest impact on the reinsurance industry.

“That trend of continuous cat losses, not large by global market standards, but attritional type losses, that just further reinforces reinsurer views about retentions,” continued Vickers.

For primary insurers’ main reinsurance programmes, in terms of retentions, this is the new normal, emphasised Vickers.

“Now, what is available are structured solutions to help primary companies manage their increased retentions. While these are potentially useful bridging mechanisms for people to get used to having a bigger retention, they’re not long-term solutions.

“Obviously, pro rata capital solutions are always available out there. But no, you’ll find that for straight in first tier coverage underwriting reinsurers are adamant and holding the line,” he added.

In terms of pricing, Vickers noted that after a little easing at 1.1 and 1.4, the market was “fairly stable” heading into the 1.7 reinsurance renewals.

“I think the key to that is that reinsurers are comfortable with the current pricing levels, but more importantly, they’re comfortable with their premium growth. So, there’s no need for any of them to do anything different. And frankly, they’re holding their breath to see what happens in the second half of the year,” said Vickers.

In the US casualty market, Vickers highlighted a continuation of differing views and concerns, something which he feels isn’t going to change anytime soon.

“Reinsurers positions are all different, both from an underwriting point of view, their view of current rate adequacy going forward, and then of course their own prior-year portfolios, how they’re performing.

“The end result was that buyers were able to get their programmes placed with modest reductions in commission, and some modest rate increases. But there was a little bit of movement around some of the reinsurer panels, reflecting reinsurers different opinions of how that market is developing or might develop,” he explained.

Commenting on the specialty marketplace at 1.7, Vickers described a calm, controlled, and fairly orderly market.

“The cyber market is interesting because of the rates coming down on the primary side. Some ceding companies may find it difficult to hit their gross written premium targets.

“Additionally, there’s a continuing trend to reduce the cession of quota share treaties a little bit more on the excess of loss side. And there’s still talk around coverage, particularly around exclusions,” said Vickers.

Clearly, conditions are now better for buyers of protection, but with reinsurers standing firm on retention levels and the tightening of terms and conditions achieved in 2023, is it still a seller’s market?

According to Vickers, “it’s balanced.”

“It was a seller’s market a year ago, it’s now balanced, and depending on how the second half of the year goes, it might shift back to being a bit more of a seller’s market. But if 2024 turns out like 2023, it’s going to become a buyer’s market,” said Vickers.