After 2023 saw substantial reinsurance market corrections, including the restructuring of programs and the reset of pricing, 2024 has focused on the details, but according to executives at Guy Carpenter, while pricing is expected to continuously recalibrate, program restructuring is likely to be sustained.

During Guy Carpenter’s recent pre-Monte Carlo media briefing, President and CEO, Dean Klisura and Chairman David Priebe, provided an overview of current reinsurance market conditions as the sector prepares to meet for the 66th Rendez-Vous de Septembre.

“I think number one is the market has ample capacity, reinsurers are motivated to see our clients and do business in Monte Carlo,” said Klisura. “And, so, people in the market have described it as equilibrium with very engaged clients and reinsurers heading into this weekend. All of our clients will be entering these renewal discussions this weekend, hoping to differentiate themselves from their key peers in the marketplace, and really leverage their key strategic trading relationships with reinsurers.”

He went on to note that buyers remain focused on portfolio management and risk mitigation across their portfolios, and that reinsurance markets are bringing a detailed and disciplined underwriting approach to each differentiated renewal at January 1 2025.

“But keep in mind, despite lots of written concerns and discussions about US casualty, many of our reinsurers are open and motivated for business at 1.1, they want to grow their portfolios,” continued Klisura.

With insurers and reinsurers set to enter into renewal discussion at RVS 2024, Klisura stressed that clients are navigating headwinds and tailwinds. Headwinds include geopolitical volatility around the world, continued economic and social inflation, macroeconomic uncertainty, and global cat losses accelerating in the first half of the year.

“But there’s also tailwinds that are benefiting our clients in the marketplace and our trading partners. The reinsurance market continues to be very, very strong and well capitalized. Capital in the marketplace, as I stated, is strong and accelerating, and for the first time in perhaps three years, we’re seeing the advent of new startups and new capital really being discussed to enter the marketplace in 2025.

“As I stated, reinsurer returns on equity remain very, very strong, so reinsurers want to hold their positions, want to be disciplined, and they want to write more business as we head into 2025. But we do expect continued and sustained underwriting rigor in the marketplace,” said Klisura.

Expanding on Klisura’s points, Guy Carpenter’s Chairman Priebe provided some context ahead of RVS 2024. He explained that after the January 2024 renewals, in which reinsurers were more responsive, during the April renewals there was evidence of risk appetite continuing to improve with underwriting discipline remaining, while at the mid-year renewals the reinsurance market transitioned into a rhythm where appetite was meeting demand.

But where does all of this leave the market ahead of RVS 2024?

According to Priebe, the “current trading cycle is marked by engaged stakeholders actively coming to the table to provide critical capital and financial support to the economy.”

“The reinsurance sector provides not only reliability, but also room for global economic growth and profitability. There would not be nearly as many successful risk takers and innovators without the strategic transfer and management of risk by our industry. Simply put, the reinsurance sector is foundational to progress,” said Priebe.

“In 2023, substantial and for the most part, broad, sweeping market corrections were made, including the redesign of many program structures and the reset of pricing. Whereas 2024 has been all about the details. Pricing is likely to perpetually recalibrate, however, program restructuring is likely to endure, particularly with regard to attachment points.

“If you think about it, it makes sense that the reinsurance offering continues to evolve in order to coincide with the ever changing nature of risk. In 2024, reinsurers have regained their profitability, as Dean pointed out, and further submits the industry sustainability and resiliency. A healthy reinsurance market with data driven negotiations generates possibilities for differentiated cedents,” said Priebe.

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