US reinsurance continues to benefit from a reset following 2022 after Hurricane Ian and other loss events saw a significant exit of capital from the industry. Despite the hard market, though, capital has been slow to re-enter the market, Jean-Paul Conoscente told delegates at Intelligent Insurer’s Re/insurance Outlook USA 2024 conference, taking place in New York today (May 2).
Conoscente, CEO of global property & casualty at SCOR, spoke following a fireside chat with Sompo chief executive officer for Reinsurance Christopher Donelan opening the conference. Donelan discussed the challenges and poor returns the industry had faced after several years of bad losses for reinsurers.
Picking up on this thread, Conoscente noted that 2022 had proved a watershed, with an outflow of capital providing an opportunity for reinsurers to rebuild their balance sheet. But return of third-part capital had been slow.
“At the end of 2023, the amount of capital increased but not really significantly,” he said. “If you look back on prior hard markets, you would see right after the first renewal a huge inflow of new capital coming in.” That hadn’t happened, despite money coming into cat bonds and some incumbents, there’d been few new entrants.
“We haven’t seen many new reinsurers being formed.”
The result is that the industry in 2024 is a more balanced market, where reinsurers’ capital has been replenished, while demand for reinsurance is increasing, despite price increases. “In prior cycles you would see as the reassurance price goes up insurance companies retaining more risk. We don’t see that,” said Conoscente.
“Nobody likes cat today. Nobody likes retaining too much casualty, as there’s a lot of uncertainty so despite the market dynamics, insurance companies continue to buy a significant amount of reinsurance because they want more certainty on their balance sheet,” he said.
Price increases continue, and it remains an attractive market for reinsures, but there have not the double digit or even 100 per cent rate increases of last year. “Today we see demand increasing, we see capital supply increasing as well, and I think we have a more balanced marketplace across different lines of business.”
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