Jan 1 reinsurance renewals positive and balanced: Klisura, Guy Carpenter CEO

Overall, capacity was adequate for the completion of most programmes at the January 1st, 2024, reinsurance renewals, and with dedicated reinsurance capital growth in the double-digits, it was a positive renewal, according to Dean Klisura, President and Chief Executive Officer (CEO) of Guy Carpenter.

Following the release of insurance and reinsurance broker Marsh McLennan’s fourth quarter and full-year 2023 results earlier today, in which it reported a 9% rise in revenue for Guy Carpenter, its reinsurance broking arm, executives held an earnings call and Q&A.

During the call, Guy Carpenter CEO Klisura discussed the key January renewals, which he described as “balanced”.

“Overall capacity was adequate for the completion of most programmes across products and classes of business. Capacity did increase, given rebounding capital in the marketplace and improved reinsurer returns in 2023. We estimate that dedicated reinsurance capital increased by double-digits, for the 1/1 renewal,” said Klisura.

In the property catastrophe market specifically, Klisura noted a more consistent trading rhythm than 1.1 2023, with capacity overall adequate to cover most non-frequency exposed layers.

Broker and other industry commentary ahead of 1.1 2024 suggested that reinsurers would hold firm on terms and conditions after adjustments in 2023, and Klisura confirmed that this was the case.

“Attachment points did not come down, so reinsurers held on to what they achieved in 2023, continuing to expose our clients balance-sheets to attritional volatility moving forward. So that certainly didn’t change,” he said.

“But overall, I thought it was a positive renewal,” added the CEO.

Klisura went on to explain that buyers of reinsurance purchased more capacity at the top of catastrophe programmes and were ultimately able to obtain more capacity than last year to achieve their objectives.

Commenting on rate movements, Klisura stated that for non-loss-impacted portfolios, rate increases were flat to high single-digit. For clients with catastrophe losses rate increases ranged from 10% to 30%, which Klisura feels is pretty robust in both the US and European markets.

In the casualty market, Klisura noted that at 1.1 2024, pricing movement was more constrained and slightly more muted than anticipated earlier in the fourth quarter.

“That said, there was downward pressure on ceding commissions for quota share contracts, and excess of loss contracts saw double-digit rate increases, you know, moving forward. But in the casualty renewal, I would say overall, capacity was adequate,” said Klisura.