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The firm’s 1st View report on the July renewals also flagged that an oversupply of ILW capacity may bring down attachment points relative to early 2023. -
The broker estimated global reinsurance capital rose by $30bn over the first quarter, with a 7% uplift in alternative capital and a 5% recovery to traditional equity.
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The organisation bought $1.4bn of reinsurance at 1 April.
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This year’s program – sealed with a panel of 78 reinsurers – includes $875mn of multi-year ILS capacity providing diversifying collateralized reinsurance capital.
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Shifts in reinsurance appetite across the risk spectrum has squeezed out ILS providers in some cases.
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The pace of rate hikes will ease back from the 1 January reset as buyers seek to lock up capacity early after last year’s dislocated renewal.
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Aon expects depleted shareholder equity to be restored over time via higher retained earnings and the ‘pull-to-par’ effect of bonds approaching maturity.
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Cat bond pricing has fallen by about 12% since year-end but margins are still strong enough that the market could be set for meaningful growth, the broker forecast.
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The real test for cat capacity will come at the mid-year point, according to Gallagher Re.
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The cat bond market is thought likely to receive an outsized portion of any capital inflows.
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CEO Locke Burt said Florida reforms would be “transformational” and that investors had become more receptive to cat risk owing to higher rates.
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The US mutual cut back its 1.1 reinsurance program, according to sources.
