Retro market bolsters reinsurance capacity, cat bonds provide competitive pressure at 1/1: Aon

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

According to global insurance and reinsurance broking group Aon, the healthy retro reinsurance market helped bolster reinsurance capacity at the key 1/1 renewals, while catastrophe bonds provided “significant competitive pressure” during the January renewal period.

In their Reinsurance Market Dynamics January 2025 Renewal report, the broker states that the retrocession market remains competitive and is benefiting from oversupply with expanded appetite from existing and new markets to meet demand across all products.

“This year, retro buyers paid particular attention to the value of their hedging strategy; purchasing behavior was driven by price and level, while coverage and counterparty remained important factors,” Aon explained.

The broker also added that the absence of any major attaching or collateral trapping loss to the retro market, including minimal impact from Hurricane’s Helene and Milton, has heavily supported strong profitability across the segment.

According to the broker, there was noticeably improved pricing across all levels at 1/1, which helped support increased demand for a variety of retro products.

While price improvements and competition was most dramatic in the tail, where products overlapped with the catastrophe bond market.

Aon also noted in their report that alternative reinsurance capital is on course to end 2024 at an all-time high.

In addition, Artemis’ new quarterly cat bond market report shows that cat bond and related insurance-linked securities (ILS) market issuance of $4.5 billion in the fourth-quarter was sufficient to take the full-year 2024 total to a record $17.7 billion, while the outstanding market reached a new all-time-high of $49.5 billion.

This significant growth rate indicates that ceding companies see growing value in complementing their overall reinsurance and retrocession purchases with cat bonds, the broker concludes.

Meanwhile, Aon Securities, the broker’s investment banking and ILS specialist arm, is anticipating a strong start to catastrophe bond and ILS market activity in 2025, with a “vibrant” market and plenty of deal flow forecasted.

Retro market bolsters reinsurance capacity, cat bonds provide competitive pressure at 1/1: Aon was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.