The outlook for the key mid-year reinsurance renewals is distinct from what happened at the Japan-focused April renewal period, and from what specialist insurer Beazley is seeing so far, sellers are adopting a different strategy, according to Adrian Cox, Chief Executive Officer of the London-based carrier.
After the release of a strong set of results for the first quarter of 2025, Beazley CEO Cox was quizzed by analysts on the outlook for the mid-year property catastrophe reinsurance renewals, in light of the elevated loss experience in 2024 and the costly January 2025 wildfires in California.
The CEO explained that catastrophe business is not a big part of the firm’s property and therefore overall portfolio.
“But I think what we are expecting is that whilst the reinsurance market remained competitive for the catastrophe renewals at 4.1, the vast bulk of those renewals were for companies that had very little exposure or much to do with California at all, in Japan, for example, and therefore fairly unimpacted by that,” said Cox.
Thinking about the companies who will be purchasing reinsurance protection between now and July 1st, Cox underlined that many of those were impacted by 2024’s catastrophe activity and also the wildfires in January.
“So, I do think the outlook for those renewals is distinct from what happened at 4.1. And certainly, from what we’re seeing so far, reinsurers appear to be adopting a slightly different strategy for that. So, I think we’re hopeful that the reinsurance market will be a little stronger, but we will wait and see, and we’ll react accordingly,” he said.
Beazley confirmed in its Q1 2025 results announcement that, as expected, the market softened in the opening three months of this year, with the firm reporting an overall rate decrease of 4%, compared with an increase of 1% a year earlier.
In fact, year to date, rates came down in all segments for Beazley apart from specialty, which was flat, and this includes a 6% decrease in property.
During the call, the CEO was questioned on the adequacy of property rates, across both insurance and reinsurance.
“Yes, we do believe that rates remain adequate overall for our property division,” said Cox. “It’s not an even playing field, though, as we look across the reinsurance portfolio, the high value homeowners’ portfolio, the large risk business that we’re writing, the syndicated shared and layered business, the mid market business, the SME business, London versus the US. There are differences in risk reward there. And so, we are being very active in managing our aggregates and our exposure growth across those to make sure that we optimise, but we remain comfortable.”
However, if the property market continues to deteriorate, Beazley will continue to look at that.
“And if we do think rates are no longer adequate, we will signal as such. But I think the portfolio management that we exercise is going to become increasingly important,” he said.
In his opening remarks, Cox noted that reinsurance prices have been coming down a little, but he stressed that this is a price issue rather than a terms and conditions and attachment point issue.
“I think that’s very important. Prices don’t have the same impact on the underlying behaviour of the insurance market as terms and conditions do. The fact that most insurers retain a lot more risk than they used to, is very important.
“And so, I don’t believe that there are the opportunities to arbitrage reinsurance to enable us to grow the top line more in the way that there used to be. But that is a good thing. Primary insurance market discipline is very important to us, as it gives better long-term opportunity and means that we can price our business properly,” said Cox.
