Proactive sellers, deeper dialog contributed to a healthier mid-year renewals: Mowery, GC

Reinsurers were more proactive when exploring ways to deploy capacity at the mid-year 2024 renewals, which, together with greater depth of data and detailed dialog between buyers and sellers, made for a healthy marketplace, according to Lara Mowery, Head of Distribution, Guy Carpenter.

Reinsurance News spoke with Mowery soon after the mid-year reinsurance renewals, to hear her thoughts on market dynamics amid an ever complex and evolving risk landscape for carriers on both sides of the fence.

“A main theme through the mid-year renewals was the availability of capacity, which is a very welcome thing for buyers as they were looking for a bit of a change of pace from last year’s renewals, and we certainly saw that in 2024 versus 2023,” said Mowery.

Although more so on property than casualty, overall, reinsurers were more proactive at looking at how they could deploy their capacity at the recent renewals, and ultimately there was adequate capacity in both core components of the market.

“Really a bit different than we’ve seen in the recent past in terms of having capacity, having reinsurers being active in the market. We saw increased quoting behaviour and increased reinsurer engagement on structure conversations. So, a healthier, active marketplace,” said Mowery.

Another key theme at the mid-years, according to Mowery, concerns depth of data on both the property and casualty side of the market, with reinsurers wanting to get further and further into an understanding of what is happening with underlying client portfolios.

“We’ve seen this growing trend, but it continues to be a theme, of sellers wanting buyers who can provide better insights into what they’re seeing in terms of some of the forces on their portfolios. How is loss development occurring within their book of business? What are the things that they’ve done in response to those forces that mitigate loss activity going forward within their own portfolios?

“At the end of the day, the better connectivity between reinsurers understanding those dynamics and all of the work that cedents have been doing in those areas, creates a much better dialog and allows us to bring more capacity to bear on solutions. This really creates an incentive for reinsurers to then be able to offer more capacity or other product solutions, in order to deploy the capital that they’re looking to put to work,” explained Mowery.

Across those two themes, continued Mowery, another component the reinsurance broker is seeing grow in importance, is the idea of partnership between the core reinsurers and the core cedents.

“This is really about looking at participations more holistically across the relationship. Understanding what it is that a cedent is buying within multiple lines of business, not necessarily just one treaty in isolation, and being able to think about that relationship from a more holistic standpoint.

“That level of engagement and deeper dialog really is able to benefit buyers when they’re thinking about their goals overall, in terms of managing the business and capital access. So, we’ve seen a deepening of that kind of activity as well,” she said.

Delving deeper into the relationship between buyers and sellers, Mowery highlighted some of the interesting shifts that have occurred in recent years.

“In the fall of 2022 going into January 1, 2023, we saw a very constrained property market where reinsurers actually had increased appetite for casualty business and were looking at that through a lens of cat capacity being very valuable. So, communicating to buyers, I want to be able to grow my casualty with you in order to provide support in the property treaties that you need support on.

“And a year later, as we were in the fall of 2023 going into the 2024 January renewals, that narrative almost completely reversed. Reinsurers were then looking at growth in property, with adjustments in attachment points and some of the coverages being offered, as well as pricing adjustment. That’s an area where reinsurers had more focus. And they were saying casualty is something we’re now watching more closely. And so, if we’re going to support your casualty, we want to position ourselves adequately on the property,” said Mowery.

“I think that back and forth across those two treaty renewal periods has created, now going forward, more of a dialog around whether it’s property, whether it’s casualty, as partners, we want to better understand your overall direction, your needs as you move forward.

“Relationships have always been important, but it’s now an even deeper investment with some of those core reinsurers in understanding the entire picture, and not just the relationship across one large treaty placement or just property, or just casualty, as a line of business in isolation,” she added.

Looking ahead, Mowery told Reinsurance News that if we run through 2024 in a way similar to how we completed 2023, then reinsurers will have additional capital again to deploy in 2025.

“That’s really up to reinsurers to evaluate where the most effective and efficient uses of that capital are. But the way we see the market sitting right now, reinsurance and providing client solutions is a very, very attractive dialog for reinsurers to be thinking about in 2025 planning.

“For buyers, the more time that you can give them to understand what market dynamics look like and to plan for that, the smoother the process is in terms of matching buyer need with capital deployment on the reinsurers side. Buyers and sellers had better market insight going into 2024 and as the amount of increased demand came through, which reinsurers met, we didn’t have an issue in finding that available capacity.

“As we move into 2025, having a similar dialog around the levels of protection and types of products that our clients are looking for, really does help crystallize solutions that we can bring to bear, and where we can leverage that as capital continues to grow through 2024 and into 2025,” concluded Mowery.

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