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While the mid-year reinsurance renewals are forecast to see further softening of between 5% and 10% as a base case, according to analysts at Evercore ISI, the team there asks whether subrogation potential for the January California wildfires could make the renewals even more competitive?

Reinsurance renewals so far in 2025 have seen pressure on pricing, with rates-on-line declining in general as the well-capitalised industry demonstrates its ambition to continue deploying capacity to grow portfolios while pricing remains at still historically elevated levels.

But commentary has been suggesting that the key mid-year reinsurance renewals, at June and July 1st, when much of the Florida property catastrophe reinsurance and US treaties are renewed, could see reduce rate pressure because of the significant losses flowing through the reinsurance market from this year’s Los Angeles wildfire event.

With those wildfires still estimated to have caused an insurance industry loss of anywhere between $35 billion and $50 billion, it has been expected that they would have some effect on renewals for US programs and reinsurer appetites.

Aon noted this week that as much as between $11 billion and $17 billion of the wildfire losses is expected to be ceded to reinsurance capital providers, as a result of which 25 percent to 33 percent of major reinsurers’ annual catastrophe allowances may have been absorbed by the fires.

However, Gallagher Re said that reinsurance capacity has been ample to support US nationwide renewals at April 1st, with price reductions seen and some more aggregate limit being deployed as well.

So, while the wildfires have been impactful they don’t seem to be changing the trajectory of reinsurance pricing, but could be preventing softening happening faster.

We were told by sources that US property catastrophe reinsurance renewals for April 1st saw more differentiation dependent on loss experience and with the recent California wildfires being factored in to decision-making.

It does seem though that the wildfire losses may not be having sufficient effect to outweigh the influence of the weight of capital in the reinsurance market, which might suggest that the Evercore ISI analysts base case of -5% to -10% at the mid-year renewals is a decent forecast.

However, while not part of the base case, the Evercore ISI analyst team highlight another important factor to consider, the potential for subrogation claims and recoveries to be made after the wildfires.

As we reported back in January, the topic of potential recoveries from subrogation of claims was raised in relation to the Eaton fire, with electrical utility Southern California Edison in focus as questions arose over whether its equipment may have caused any of the blazes.

While legal action has been started, so far there hasn’t been any official determination of liability related to the Eaton fire.

But, the Evercore ISI analyst team rightly point out that the Eaton wildfire is expected to make up around one-third of the industry loss from the wildfires, on which basis it could be somewhere between $11 billion and close to $17 billion of the total market loss.

With Aon estimating that $11 billion to $17 billion of the total industry loss would be ceded to reinsurance capital providers, should subrogation come into play the ceded figure related to the California wildfires could also be reduced, perhaps meaningfully.

Resulting in a commensurate drop in how much of the traditional reinsurers catastrophe budgets have been eaten up by the wildfires, while also allowing many insurance-linked securities (ILS) funds to free up more of their capital as well, after the flow of subrogation.

All of which could have the effect of leaving the reinsurance and ILS sector even better capitalised in time for the mid-year renewal season, if a determination is made on any liability for the Eaton fire before that date.

The result of which could be reinsurers and ILS funds coming to the mid-year renewals with increased appetites, driving greater competition and perhaps amplified softening of rates.

The Evercore ISI analysts muse, “We wonder if subrogation potential for LA fires will push down insured losses and
result in a more competitive renewal.”

Which is worth watching out for over the coming months. The latest from SoCal Edison is that the electrical utility began a new phase of inspections and testing of electrical equipment in Eaton Canyon on March 17th, which it said could take some weeks and is being done in coordination with fire investigators.

However, the utility also said (in a statement from March 14th), “SCE does not anticipate having an immediate update following the upcoming inspection and testing and continues to expect the full investigation to take several months to complete.”

Which suggests that the reinsurance industry may not know whether subrogation claims are going to be warranted, let alone rewarded, by the time of the mid-year renewals.

Could wildfire subrogation drive more competitive mid-year renewal? Evercore ISI asks was published by: www.Artemis.bm
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Reinsurance sidecars have continued to gain in popularity and brokers have commented today on the expansion of this third-party investor supported segment of the insurance-linked securities (ILS) market, seeing it as one area driving robust capital growth into 2025.

Previously, Aon Securities estimated that the outstanding market for collateralized reinsurance sidecar structures had reached a new record high of $10 billion in a report from September 2024, which that broker’s capital markets unit said represented roughly 40% growth on the prior year.

While, AM Best and Guy Carpenter put the reinsurance sidecar market at between $6 billion and $8 billion, as of the middle of 2024.

Then, after the January renewals this year, Gallagher Re said that reinsurers within the EMEA regions had been offering more capacity, in part empowered with ILS-fueled new sidecar capacity.

Now, in commentary published in April reinsurance market reports, both Gallagher and Aon have again highlighted the collateralized reinsurance sidecar as an area of continued expansion, within third-party or alternative forms of ILS capital.

Gallagher Securities, the capital markets and ILS arm of Gallagher Re, said that, “Sidecars have continually gained in popularity, with Gallagher Securities observing nearly a roughly 50% increase in issuance YOY.”

This broker said, “Cedants are increasingly forming partnerships with investors through sidecars and related vehicles, driven by investor demand for access to premium flows from insurance risks.”

Adding that, “This interest is now extending beyond traditional property catastrophe risks to include casualty and other non-cat ILS risks and using innovative structures, signaling a strong future for the sidecar market.”

Aon’s Reinsurance Solutions and its Aon Securities arm also commented on the continued high-levels of activity in the reinsurance sidecar space in its new market report.

Aon also explained that new inflows to sidecar structures are seen as one of the key drivers for alternative reinsurance capital growth, alongside catastrophe bonds.

As we reported, Aon sees alternative or ILS capital in reinsurance as having reached $115 billion by the end of 2024, a figure that has likely grown with the robust catastrophe bond issuance seen in Q1 2025.

Aon said, “In addition to the robust growth of the catastrophe bond market, the broader ILS market has seen further growth in sidecar capital, pushing alternative capital to nearly $115 billion.

“Increased investor appetite has allowed many traditional reinsurers to expand their sidecar and/or catastrophe bond programs, enabling the deployment of additional capacity.”

This broker continued to explain that, “Sidecar capacity has also grown, in line with what we’ve seen over the prior two years. New entrants to this market—many of whom are well-regarded underwriters—have developed new platforms, creating exciting opportunities for investors. Further, existing sidecar offerings (e.g., Everest’s Mt. Logan) continued to expand from reinvigorated marketing efforts and strong returns over the past two years.

“The sidecar market has also grown beyond natural catastrophe risk to long-tail casualty opportunities, generating interest from new types of asset managers looking to manage more long-term capital.”

However, Aon also noted that the January 2025 California wildfires will cause losses for many reinsurance sidecar structures.

Saying, “The sidecar market, on the other hand, will be impacted by the wildfires, given that these contracts are typically structured as a pro-rata share of non-proportional reinsurance portfolios.

“While it’s too early to tell how the wildfires will impact the overall returns of the property sidecar market, it’s reasonable to assume a negative return during the first quarter of 2025.”

Find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.

Reinsurance sidecar market seen ~50% bigger by Gallagher. Aon notes Q1 wildfire impacts was published by: www.Artemis.bm
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The lawsuit filed by Porch Group against broker Gallagher Re regarding the Vesttoo reinsurance letter of credit (LOC) collateral fraud has been dismissed with prejudice by the Texas court. But Porch has said it intends to continue to pursue recourse in the matter.

Porch Group is the owner of insurer Homeowners of America Insurance Company (HOA), a company that particularly affected when the Vesttoo reinsurance letter of credit (LOC) collateral fraud caused financial impacts to the firm.

Porch had filed a lawsuit against broking group Arthur J. Gallagher, claiming its reinsurance arm Gallagher Re had “grossly mismanaged” the administration of a reinsurance arrangement subject to collateral posted by Vesttoo that turned out to be fraudulent.

As we later reported, Gallagher responded to the lawsuit and the complaint made by Porch, urging the Texas court to dismiss the petition “in its entirety and with prejudice.”

Porch had then responded, rejecting broker Gallagher’s motion to dismiss the legal case, saying it believed the company had failed to satisfy the obligations of their contract.

In a judgement filed this week, it was “ordered, adjudged, and decreed that this action and all claims by Plaintiff Porch.com, Inc. against Defendant Gallagher Re Inc. are dismissed with prejudice.”

The judgement also decrees, “That Plaintiff take nothing against Defendant; that all relief not granted is denied unless applicable law allows a party to seek some type of postjudgment relief; and that all allowable and reasonable costs are taxed against Plaintiff.”

Referring to arguments made by Gallagher Re in its motion to dismiss the case, the order concludes that the sole breach of contract claim made by Porch against the broker is dismissed with prejudice, while a contact claim against the broker’s parent AJG is denied as moot, as AJG had been voluntarily dismissed from the action.

So closes another chapter in the Vesttoo saga.

In response to an Artemis enquiry to the companies, a Porch spokesperson said, “We will continue to vigorously pursue recourse in this matter, including via all available legal and other processes,” while Gallagher Re declined to comment.

Whether Porch continues to pursue Gallagher Re specifically remains to be seen. But the company is persisting in its efforts to recover more of the value it lost and damages it suffered due to the Vesttoo letter of credit collateral fraud from other avenues.

As a reminder, Porch recently secured a $7.1 million settlement over constructive trust claims with the Vesttoo Creditors Liquidating Trust in relation to so-called constructive trust claims linked to a reinsurance transaction.

The insurer continues to pursue a court case against China Construction Bank, claiming its staff were complicit in the reinsurance collateral fraud, as well.

Read all of our coverage of news related to the fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo reinsurance deals.

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Aon’s Reinsurance Solutions division forecasts increased demand for property catastrophe reinsurance protection in the United States at the key mid-year renewal season, with additional limit of as much as $7.5 billion expected to be sought out by cedants, much of which will be for risks in Florida.

However, the broker also expects the mid-year renewals will see “pent-up supply still outstripping demand”, from the very-well capitalised reinsurance and insurance-linked securities (ILS) markets.

Commenting on the April 1st renewals just completed Aon said, “A competitive reinsurance market resulted in improved pricing for most insurers at April 1 renewals, driven by enhanced reinsurer results and relatively benign natural catastrophe loss activity across the region.”

Adding that, “These buyer-friendly conditions are expected to continue through the mid-year reinsurance renewals, supported by robust levels of capacity and reinsurer appetite.”

Global reinsurance capital reached a record high of $715 billion in 2024, Aon said, helped by expansion of the catastrophe bond market and alternative capital rising to a new high of $115 billion.

George Attard, CEO APAC for Reinsurance Solutions at Aon, commented, “At April 1 our clients continued to benefit from favorable reinsurance market and pricing conditions, supported by Aon’s extensive advocacy, analytical and transactional expertise.

“We expect to see opportunities for insurers to explore frequency protections and top-up covers as we approach the mid-year renewals, especially for those insurers that concentrate on the key characteristics of high performance.”

Attard added, “Across the board, facultative capacity has increased and reinsurers are competing more aggressively, creating greater opportunities for insurers to use facultative reinsurance to support growth plans and manage volatility.’

Attard further commented on the outlook for the mid-year reinsurance renewals at June and July, when much of the US business and a particular Florida focus, as well as treaties in Australia and New Zealand are always key features of the negotiations.

“Heading into the mid-year renewals, we expect over $7.5 billion of additional U.S. property catastrophe limit demand, mostly due to a healthier Florida market and the depopulation of the state windstorm insurer Citizens,” Attard explained.

Further stating that, “We also anticipate some additional reinsurance purchasing from U.S. national carriers looking to mitigate further major net losses during 2025.”

Aon’s Reinsurance Solutions said that it expects demand for property cat reinsurance limit in Florida to rise by between $4 billion and as much as $5 billion at the June 2025 renewals.

An expected increase in the Florida Hurricane Catastrophe Fund (FHCF) attachment (by around $1.4 billion), is anticipated to drive additional buying below the FHCF, while some vendor model changes will also support increased demand for reinsurance and so will Citizens depopulation as more risk moves to private insurers.

Aon notes that reinsurance capital continues to grow and is expected to keep up with demand, so no shortage of capacity is expected for the mid-year renewal season.

However, the company also explained that after the significant California wildfire losses earlier this year, with as much as between $11 billion and $17 billion being ceded, “These losses have absorbed 25 percent to 33 percent of major reinsurers’ annual catastrophe allowances which may affect how some come to the market at mid-year.”

The reinsurance broker added that, on the client side, “For insurers, current market dynamics are creating opportunities to explore frequency protections and top-up covers in an increasingly favorable pricing environment. Some clients are taking advantage of favorable market conditions and securing capacity at attractive rates ahead of mid-year renewals.”

Which is a trend seen in the catastrophe bond market, with more US limit placed in the first-quarter of the year and a number of sponsors coming to market earlier than typical.

Early signings are likely to remain a feature in the run-up to the June and July reinsurance renewal season, on which Aon said, “Opportunity exists to pursue off-cycle additional protection from reinsurers looking to deploy capital not taken up during January renewals. In addition, reinsurers will be keen to write premium to earn back losses accrued in the first quarter.”

Given the additional limit set to be demanded for reinsurance renewals at the mid-year, this presents opportunities for the insurance-linked securities (ILS) market.

Catastrophe bonds can be expected to absorb a proportion of this, as too while private ILS strategies focused on collateralized reinsurance.

With Florida in focus for the highest increase in property cat limit demand in 2025, that being ground-zero for the deployment of ILS capacity it is to be expected the market takes its share.

However, it’s always worth remembering that an incremental $7.5 billion of limit being required will not equal that sum in additional capital being deployed, given the leverage of the rate balance-sheet and levered ILS strategies.

Read all of our reinsurance renewals news and analysis.

US property cat demand to rise ~$7.5bn at mid-year renewals, Florida taking up to $5bn: Aon was published by: www.Artemis.bm
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While the April 1st reinsurance renewal is a smaller affair for property catastrophe accounts in the United States, broker Gallagher Re reports a wide-range of pricing outcomes, dependent on loss experience, with risk-adjusted rates on-line falling as much as 15% for loss free accounts, or rising as much as 15% for catastrophe loss hit.

“In a relatively light renewal period, nationwide account dynamics were broadly a continuation of the themes witnessed at the 1.1.2025 renewals,” Gallagher Re explained.

Adding that, “Reinsurers were highly focused on the impact of the January Californian wildfires, with buyers focused on differentiating both approach to the peril / geography and the outcomes from the event(s).”

However, impacted renewals were small in number and outcomes at the April reinsurance renewal for US cedants were highly dependent on loss experience and also program size.

Catastrophe loss free accounts property catastrophe reinsurance rates on-line came in with -5% to -15% reductions, on a risk-adjusted basis, Gallagher Re reports.

But, catastrophe loss hit US accounts saw property cat rates ranging from flat to +15%.

Risk loss free property reinsurance treaties renewed from flat to -5%, while risk loss hit property renewals saw rates-on-line ranging from +5% to as much as +20%, Gallagher Re said.

Which drives home the wide-range of outcomes and the influence of losses on property and property catastrophe reinsurance appetites and pricing at this time.

Despite the wildfires in January, Gallagher Re noted that capacity for US property catastrophe risks remained ample at the April 1st 2025 renewals.

Buyers took advantage of the increased capital supply to hold their retention levels constant, and push price reductions at the top end of their towers, typically the most competitive layers.

Due to increased capacity for property risks, Gallagher Re said there was increased demand for aggregate covers at the renewals with more placements seen as well.

“Several carriers sought to bolster existing aggregate programs, while others looked to establish new programs. That said, these aggregate protections continued to be pitched at the capital preservation, not earnings protection level,” Gallagher Re explained.

Read all of our reinsurance renewals news and analysis.

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Howden Re has reported that risk-adjusted catastrophe excess-of-loss (XoL) reinsurance rates-on-line for Japan saw reductions of 10-15% at the April 1st 2025 reinsurance renewals, as pricing “eased from a high base” and sellers sought to protect or grow positions at the renewal amidst higher competition and greater supply.

Risk-adjusted rate reductions in Asia-Pacific (APAC), combined with varied specialty renewal outcomes, reflects “hard market softening” at the Japan-focused April renewals, according to the reinsurance broker’s latest analysis.

With many property catastrophe reinsurance treaties having experienced relatively loss free outcomes for the last contract year, a continuation of January’s softening trend had been largely anticipated for the April renewals, as we reported.

“There were 10-15% risk-adjusted reductions on catastrophe excess-of-loss programmes, whilst global specialty and direct and facultative reinsurance placements varied by class,” the broker added.

The broker also revealed that both Japanese wind and earthquake XoL pricing adjusted from a high base at the April renewals, following consecutive years of market-driven and post-loss hardening, which began in 2018 and 2019 following the impacts of typhoons Jebi, Hagibis, Trami, and Faxai.

You can see Howden Re’s updated rate-on-line index chart for Japanese catastrophe excess-of-loss reinsurance contracts below:

“The natural catastrophe loss landscape in Japan and the Asia-Pacific region in 2024 was subdued relative to previous years, contributing to moderation at renewals,” Howden Re explained.

“The most significant losses of the last 18 months have been the Noto earthquake in January 2024, the Taiwan Hualien earthquake in April and Typhoon Yagi in September.”

Additionally, there had been some debate across the industry surrounding the potential impact of the January 2025 California wildfires on the Japanese April 1 renewals, however, Howden Re notes that the event, while impactful to reinsurer operating performance, did not “meaningfully constrain supply at 1 April.”

Overall, for Japanese catastrophe XoL programmes, less limit was purchased at the lower end of programmes with some buyers of coverage seeking additional top-layer reinsurance limit to address specific risk concerns, Howden Re continued.

The broker also noted, on average, ceding commissions for proportional quake cover increased by approximately two percentage points, signalling improved terms for cedants, as per-risk commissions varied by programme performance.

However, despite rate reductions of up to 15%, Howden Re says that “Japan remains an attractive market for reinsurers due to its high volume, relatively uncorrelated risk and deep pool of underwriting expertise backed by experience and exposure data.”

Andy Souter, Head of Asia Pacific, Howden Re International, commented: “This renewal is, on balance, a welcome reprieve for buyers in Japan and throughout Asia-Pacific on the back of an extended period of significant rate increases. With the recent easing in pricing and stable renewals, it’s a good time for cedents to secure more favourable terms and address specific risk concerns.”

Further in Howden Re’s analysis, the broker highlighted how the price moderation witnessed in most classes of business at the April renewals was facilitated by rising levels of dedicated reinsurance capital and strong insurance-linked securities (ILS) inflows, while also noting that capital levels now exceed their previous peak.

“This increase has been bolstered by record catastrophe bond issuance, which has continued in earnest during the first quarter of this year. Whilst reinsurers have reported healthy earnings and strong book value growth, it is becoming clear that future gains will increasingly depend on strategic innovation, rather than pricing momentum alone,” the broker added.

You can see Howden Re’s estimates for reinsurance and ILS sector capital levels in the chart below, which shows the significant growth seen in recent years:

David Flandro, Head of Industry Analysis and Strategic Advisory, Howden Re, commented: “At this stage of the pricing cycle, profitable growth increasingly requires a greater focus on product development, underwriting strategies and capital management.

“In order to navigate this market phase, comprehensive, integrated capabilities spanning treaty, facultative, MGAs, strategic advisory and capital markets, Howden Re is uniquely positioned to support cedents and reinsurers as they navigate this next critical phase of the cycle.”

Howden Re’s April renewal report also revealed mixed outcomes at April 1st for the global specialty reinsurance sector, primarily driven by ongoing uncertainty around war-related losses and macro volatility.

The broker explained that aviation reinsurance risk-adjusted pricing was largely flat at April 1st, showing a slight hardening compared to the 3.5% year-on-year decline seen at the January renewals earlier this year.

Moving over to the marine and energy space, Howden Re states that the downstream losses experienced in 2024 had little impact on programmes at April 1st, although the Baltimore bridge collapse remained in focus, due to the incident taking place within days of last year’s renewal and was therefore largely unaccounted for.

Although wildfire exposures were widely discussed, Howden Re noted that within the marine and energy space, specie was the main focus.

Switching attention over to terror, reinsurance rates reduced further amid softening on the direct side of the market.

“Consistent event definitions continued to provide stability in an otherwise evolving market. New capacity is simultaneously seeking entry through the MGA channel on both the insurance and reinsurance side, as observed in previous renewal cycles,” Howden Re explained.

On the other hand, the direct & facultative (D&F) market “continues to show resilience with strong demand for excess-of-loss capacity despite early 2025 loss activity,” says Howden Re.

The broker explained that reinsurers demonstrated greater pricing discipline at April 1st, compared to January 1st, particularly in response to California wildfire exposures which were largely retained by cedents.

Chris Medlock, Director, Global Specialty Treaty, said: “The April renewal reflected a broad range of outcomes across specialty and D&F lines. Whilst pricing softened in some areas, reinsurers remained selective and disciplined. Capacity was available but placement success depended on structure, exposure and underlying risk quality.”

Read all of our reinsurance renewals news and analysis.

Japanese property cat rates down by as much as 15% at April 1: Howden Re was published by: www.Artemis.bm
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The April 1st 2025 reinsurance renewals are said to have seen a continuation of the gradual softening trend experienced at the start of the year, with reinsurance capital providers displaying strong appetites for growth still, but sources suggesting the overall outcome has remained disciplined.

While there have been some double-digit rate decreases seen, particularly in Japan and for higher-layers of towers, the general feeling is one of markets remaining focused on achieving adequate risk-adjusted returns for deploying capital to April renewal opportunities, as pricing comes off cyclical highs.

With many property catastrophe reinsurance treaties having experienced relatively loss free outcomes for the last contract year, a continuation of January’s softening trend had been largely anticipated.

Speaking with brokers and market participants in the last week, the outcome looks set to be one where many treaties have priced down, on a risk-adjusted basis, but that some larger cedants buying bigger reinsurance towers have also been taking the opportunity to leverage their financial strength to manage renewal costs, particularly in Japan.

Sources in the collateralized market and at insurance-linked securities (ILS) funds told us that they have been satisfied with the  April 1st opportunities they have sourced, while also noting a more competitive marketplace and strong appetites from reinsurers that have in some cases made ILS funds be more selective.

As well as reinsurers exhibiting strong appetites for growth at this renewals, which is no surprise given high capital levels and the fact pricing remains robust even with the softening seen, there are also said to have been some additional renewal participants, with some markets returning with a desire to grow into regions that were renewing at April 1.

One of the drivers for that is an impression that some regions renewing at April 1st have experienced strong growth in premium volumes, expanding the available opportunity set. But overall demand for protection across the April renewal has been relatively stable it seems, with additional purchases at some levels in reinsurance towers offset by stronger or larger cedants managing their costs through increased retentions and restructuring of towers.

On a risk-adjusted basis many renewals have come in softer it appears, but this is still only seen as a gradual continuation of recent renewal trends, despite the more competitive marketplace and in some cases growing number of reinsurance panel participants.

Brokers told us that there has been ample capacity to close renewals for April 1st and that their clients, the reinsurance buyers, are largely very satisfied with the favourable outcome.

The broader range of market participants being seen has also included some ILS players who, we’re told, have had some additional capacity to deploy and found opportunities attractive enough to meet their return targets.

Fully-collateralized limit remains less evident at April 1st, compared to other major renewals, given buyers often have a preference for rated paper. There is collateralized ILS deployment into April renewals, but it’s often based on long-term relationships with ILS managers and has never expanded that rapidly.

But, we understand fronted ILS capacity continues to be a participant that is growing in some cases, with some ILS managers said to have have accessed business from new regions and counterparties this year.

Japanese renewals have seen a competitive market environment this year, with softening largely seen, especially for the clients that have been able to demonstrate the best performance, most disciplined growth and where enhanced data granularity has been provided.

As a result, renewals are seen as risk-adjusted down by single digits and close to double-digits, for the majority, or into double-digits for top-performing cedants and larger catastrophe excess-of-loss towers, especially at higher-layers.

Reflecting the discipline still being seen, we’re told that the performance of an underlying treaty has been a key in April renewal outcomes, with markets pushing back on much lower rates in some areas, while reductions have been highest for cedants that can demonstrate their performance and provide enhanced portfolio data to assist reinsurance markets in their pricing.

But, perhaps making the outcome a little less clear, Japan renewals saw some larger buyers opting to manage the costs of their reinsurance purchases by retaining more risk against their backdrop of strong results and robust financials. Some have also been keen to buy more cover higher-up as a result of this trend, we are told.

Another major April 1 renewal market is India, where there were flatter risk-adjusted outcomes for many, but some softening seen, again for the best performing cedants. Here there has also been some demand increase it appears, although this is on the back of strong premium volume growth, we understand.

The Philippine market is thought to have also experienced a softening market for reinsurance at the renewals, although with some greater differentiation seen. Other parts of Asia are said to have experienced similar outcomes.

On the all-important terms and conditions, sources said the majority remain relatively unchanged, aside from adjustments where retentions have been adjusted to account for growth, or financial strength, often at the behest of the cedant itself, another sign of cost management in a still harder reinsurance market price environment.

Rates-on-line remain higher than where they were five years ago, even with the continuation of the January softening trend at April 1st, but we understand markets did push-back on early attempts to push for greater reductions this year, seemingly keen not to see the rate environment return to the levels seen around 2017.

Property catastrophe reinsurance rates-on-line had fallen by 7.2% at January 1st, according to broker Guy Carpenter’s regional indices.

Guy Carpenter’s APAC property catastrophe reinsurance rate-on-line Index was still up by 32% after the January renewals, since the market bottomed out in 2018 for this region.

When this index is updated to incorporate the April 1st outcomes, it seems likely the 2025 figure will fall a little further given the sentiment we’re hearing from the market.

There are some reinsurance renewals in the United States at April 1st and here we’re told that again, the outcome is seen as similar to January, however with more differentiation evident dependent on loss experience and with the recent California wildfires being factored in.

We understand there has been some demand increase in the US, while there has also been a little more retrocession buying and that this has experienced competitive markets as well.

In the coming days we expect to get more colour as broker reports on the April renewals come out, so stay tuned for additional insights.

Read all of our reinsurance renewals news and analysis.

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ICEYE, the provider of satellite data and services to inform decision-making and analysis, has unveiled its industry-first hurricane data impact solution that’s designed to provide insurers with near-instant visibility into wind and flood damage across the United States.

By delivering high-resolution impact data within 24 hours of landfall, the solution could significantly improve how insurers assess claims, allocate resources, and even potentially structure parametric insurance products in the future.

According to the announcement, ICEYE’s Hurricane Solution leverages a combination of advanced satellite imagery, ground-based sensors, and auxiliary data to capture a comprehensive picture of hurricane damage.

The system covers vast geographic areas, spanning tens of thousands of square miles, and can pinpoint areas of major neighbourhood and building impact along the hurricane’s track.

Additionally, ICEYE’s synthetic aperture radar (SAR) technology enables on-the-ground monitoring through cloud cover and day or night for continuous impact assessment.

Furthermore, the solution allows users to overlay property portfolio data for the impacted regions with a detailed heatmap that pinpoints neighborhood-level and individual building damage, along with a flood depth footprint measuring water levels in inches.

This level of precision suggests that the data could potentially be used as a parametric trigger, offering a real-time, objective measure to automatically initiate insurance payouts based on observed damage rather than modeled estimates.

Immediate access to this actionable data provides insurers with a comprehensive view of hurricane impacts well ahead of traditional sources. This will ultimately allow insurers to quickly identify the hardest-hit customers, pinpoint areas with high loss concentrations, and strategically deploy field resources.

As well as this, ICEYE noted that insurance carriers will be able to conduct rapid claims triage and immediately identify complex claims that combine wind and flood losses to inform adjuster allocation and help reduce costs.

Rupert Bidwell, Vice President of Insurance Solutions at ICEYE, commented: “Our Hurricane Solution offers insurers a completely new level of situational awareness as we head towards the 2025 hurricane season. Access to near real-time, large-scale damage data for both wind and flood within 24 hours of landfall can help supercharge every phase of the response from initial loss estimates to claims resolution.

“Ultimately, it helps insurers deliver an enhanced customer experience through more effective support, better claims triage, and faster settlement when they need it most. That’s truly game-changing.”

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Equity analysts from investment bank J.P. Morgan came away from a recent visit to companies in the London insurance and reinsurance market with the impression that underwriters feel there is plenty of headroom left in the higher attachment points still installed across the sector, despite inflationary influences on losses.

“We came away from the tour with the feeling that the market is still in a good place; rates might be starting to weaken but they remain at highly adequate levels with the potential for strong ROEs for at least the next couple of years,” the analysts said.

While pricing trends are slowing across reinsurance, the J.P. Morgan analyst team note that they remain at “very healthy levels”, saying that while reinsurance softened through 2024 “the picture remains positive overall.”

“While there was a softening in price, it was considered that terms and conditions remained robust and attachment points were still at attractive levels,” the analysts reported.

Saying, “We had been slightly concerned about whether the material improvement in attachment points had been eaten away by inflation but we came away reassured that there is still plenty of headroom before the increase in retentions disappears.”

As a result, the London market insurance and reinsurance constituents that J.P. Morgan’s analyst team met with are largely confident that attractive underwriting opportunities exist.

“The view was almost universal that given the rate adequacy of pricing, there were likely to still be opportunities to grow and expand portfolios in 2025,” the analyst team explained.

The analysts highlighted in their report, that some attachment points do get adjusted for inflation, which tends to result in further upwards movement given the general inflationary trajectory seen around the world.

This resulted in attachments being “broadly flat in nominal terms” at the 1/1 reinsurance renewals and the majority are still at healthy levels, despite any inflationary influences.

The outlook for April 1st reinsurance renewals in Japan and South Korea had always been for a continuation of January’s softening trend.

It seems that in some cases the Japanese rate softening has been perhaps slightly faster than January, with some layers of towers seeing rate decreases in the double-digits, but overall we’re told the perception is that attachments have largely held again and some have been adjusted for inflation.

J.P. Morgan’s analysts said that the sentiment in London during their recent visit was that the recent wildfires might dampen price softening at the US renewals at the mid-year.

As rate-on-line stagnates, or softens, it’s going to be incredibly important for underwriters to take into account the effects of inflation on exposure and therefore ensure attachments are being kept at sufficient levels.

It would be very easy to allow for the effective attachment points to come down, as a lever for sustaining more rate per unit of risk in property catastrophe reinsurance renewals.

But the market has been there before, in the last softening cycle through the early to mid 2010’s, when there was little control of attachments and terms or conditions that in some cases caused meaningful increases in the probability that reinsurance layers attached.

While there may be plenty of headroom in attachment points at this stage and the market has appeared disciplined on this front, it’s important that other terms and conditions are not weakened to the degree that attachment risk rises unduly, while underwriters and insurance-linked securities (ILS) managers also need to keep a grip on inflation.

So many factors go into deriving a probability of attachment, for a reinsurance layer or an instrument such as a catastrophe bond. Inflation can undermine attachments if it’s not properly measured, considered and factored in.

But it’s also key to capture all forms of inflation, through the exposure base but also in the economy and how each can affect claims quantum, development and follow-on costs that can drive claims higher such as rebuilding.

While headroom still exists at this time, there’s no guarantee it will remain in a year or two’s time if the market becomes increasingly aggressive and competitive at renewals, or falls back into its old habit of placing the importance of securing volumes higher than sustaining profitability.

Plenty of headroom left in higher reinsurance attachments, despite inflation: J.P. Morgan was published by: www.Artemis.bm
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The Governing Board of the California Earthquake Authority (CEA) approved a revision to its guidelines for engaging in catastrophe bond risk transfer to the capital markets this week, while also noting a successful reinsurance renewal at April 1st, saying it secured favourable pricing and limit.

The California Earthquake Authority (CEA) is a significant buyer of reinsurance limit still, even after its risk transfer tower has shrunk over the last year.

The CEA’s risk transfer tower had included just over $9.15 billion of limit as recently as following the June 2024 reinsurance renewal season, but has been steadily shrinking ever since.

As we reported earlier this week, at February 28th 2025 the overall tower stood at just over $7.72 billion.

Of that, catastrophe bonds provide $2.455 billion of multi-year reinsurance protection to the tower, so made up approximately 32% of the total as of that time.

Accessing the catastrophe bond market for reinsurance has been part of the CEA’s risk transfer strategy for many years and since 2011 the earthquake insurer has been a particularly consistent sponsor of cat bond issues.

But the CEA evolves its strategy and has now taken one step this week, to further streamline its use of the capital markets for reinsurance in a closed session of the latest Governing Board meeting.

Governor Designee Michele Perrault explained after the session reopened, “In consultation with legal counsel in closed session, the board approved a revision to the guidelines for securing risk transfer, traditional reisurance and alternative risk transfer.

“This revision removes a requirement that CEA, when transferring risk into the capital markets, procure an insurance policy to indemnify a reinsurer or service providers for claims related to their performance of duty.

“The board made this change in recognition of the maturity of the catastrophe bond market, as well as the increased sophistication of all of the involved parties, including CEA, its service providers and its legal team of in-house and outside counsel.”

It’s perhaps a signal that the CEA feels the cat bond market is mature enough that service providers should be able to participate in such a way that they take responsibility for their own delivery guarantees. Whatever the motive, it’s one additional way the CEA can reduce friction in its interactions with the capital markets for catastrophe bond issuances going forwards.

In our article earlier this week, we also explained that the CEA had a significant reinsurance renewal coming up for April 1st.

The CEA had almost $1.2 billion of traditional or collateralized reinsurance limit that was scheduled to mature on March 31st and we understood had been in the market for a renewal of some or all of that limit.

No figures have been disclosed, but CEA executives appeared highly satisfied with the outcome of its April reinsurance renewal.

Tom Hanzel, Chief Financial Officer of the CEA, noted when discussing the insurer’s finances, the reduction in reinsurance expenses, as the CEA’s reinsurance tower had become smaller over the last year.

But he also noted that the exposure base has stabilised somewhat, which might imply we’ve seen the last of the significant non-renewals that have occurred over the last year.

Hanzel also highlighted that the amount of reinsurance limit being purchased had reduced significantly, also saying that while the CEA’s risk transfer tower limit has come down, there have also been changes to its claims paying capacity overall.

Hanzel said that the CEA staff believes the sweet-spot in terms of claims paying capacity may be at the 380 to 400 year return-period. Recall that it targets maintaining claims paying capacity at least at the 350-year level.

Hanzel said, “We want to buy the correct amount of reinsurance, not over or under, at each period of time.”

Moving on to comment on the April 1 reinsurance renewal, Hanzel said that the CEA’s staff have, “Just finished up our April 1st, or finalising our April 1st renewal, and it was very successful, really well done. I think it was in our favour and our policyholders favour, in the amount of limit and the pricing we were able to secure.

“So that’s the first large reinsurance on a syndicated basis that we’ve done this year, and it went really well.”

Hanzel also said, in reference to the sponsorship of the $400 million Ursa Re Ltd. (Series 2025-1) catastrophe bond earlier this year, “We did the cat bond in February, which went equally well. So we feel strong about where we stand with the risk transfer market coming into 2025.”

It will be interesting to see whether the CEA renewed the full expiring limit of reinsurance at April 1st, or whether its risk transfer tower shrank any further. The commentary on stabilisation of exposure and the favourable renewal outcome might suggest more stability will have been seen in the reinsurance towers’ limit as well.

The CEA has $2.455 billion of outstanding catastrophe bond coverage still in-force at this time, continuing to occupy 3rd position in our cat bond sponsors leaderboard.

View details of every catastrophe bond sponsored by the CEA in the Artemis Deal Directory.

CEA revises cat bond issuance guidelines, says April reinsurance renewal a success was published by: www.Artemis.bm
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