By Carlos Pallordet
Jan 8 - (The Insurer) - Shares in major Bermudian and European reinsurers have risen since the 30 December close, reflecting positive near-term sentiment for the sector despite rate reductions and broker warnings that reinsurer appetite is growing faster than demand.
SiriusPoint has outperformed its peers over the last five trading days, with its shares rising 7.6 percent since 30 December, despite a slight pullback after peaking on 2 January – the first trading day of 2025.
French reinsurer Scor is in second place, having gained 5.7 percent since the 30 December close.
Continental peers Hannover Re and Munich Re have added 5.2 percent and 3.6 percent, respectively, between 30 December and yesterday’s close.
Swiss Re has recorded a more modest 2.8 percent gain across the last five trading days but ended 2024 with a robust 38.8 percent annual gain, including a 0.8 percent rise in December. In comparison, Scor rose 0.3 percent in December, while Hannover Re and Munich Re dipped by 2.3 percent and 1.5 percent, respectively.
London-listed Conduit has gained 3.5 percent since 30 December while Bermudians Everest Group and RenaissanceRe have added 3.2 percent and 2.0 percent, respectively.
The post-renewals share price rise reflects continued investor confidence in the reinsurance sector, even as cautionary broker commentary hints at a peak in the hard market.
Over the same period, the S&P 500 Insurance index has fallen 0.7 percent while the broader S&P 500 benchmark has flatlined.
European equity has performed better with the Stoxx 600 Insurance index up 1.9 percent and the broader Stoxx 600 benchmark up 2.2 percent over the last five trading days.
Brokers’ commentary on 1.1 renewals
Preliminary reports from Guy Carpenter, Aon, Gallagher Re and Howden have pointed to increased availability of capacity as a major factor driving property reinsurance rate reductions.
Dedicated reinsurance capital was up 6.9 percent at the end of 2024, according to Guy Carpenter in partnership with AM Best, while Aon noted that capacity was further bolstered by an easing of retro market conditions.
The expanded supply of capacity was “more than sufficient to meet continued growth in global demand”, Aon said.
Meanwhile, Howden characterised the January 2025 renewals as “past the pricing peak”. Risk-adjusted rates for property cat dropped 8 percent at the 1.1 renewals, according to Howden’s pricing index.
“Property catastrophe renewals were consistently oversubscribed,” Guy Carpenter said, with reinsurer appetite increasing by 10 to 15 percent while demand grew by around 5 percent.
On Monday, Guy Carpenter reported a 6.6 percent reduction in its global property catastrophe rate on line index at the January renewals, marking the end of a sustained period of price hardening which has seen increases in the global index at each January since 2018.
Meanwhile, Aon’s full report – also released on Monday – indicated the reinsurance market is expected to remain broadly attractive for both buyers and sellers in 2025. However, Aon cautioned that reinsurers need to demonstrate their value if they are to achieve their growth ambitions.
Elsewhere, investment bank Peel Hunt said it has factored reinsurance rate declines of around 35 percent over the next five years into its estimates as a "prudent" quantum of the softening cycle.
In a note, Peel Hunt said the recent 1 January 2025 renewals indicated that the hardening reinsurance cycle has peaked, although rate adequacy remains "very attractive" and reinsurers continue to deploy capital.
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