Mid-year renewal trading conditions more favourable for reinsurers than Jan 1: RenRe CUO

David Marra, Executive Vice President and Group Chief Underwriting Officer (CUO) of Bermuda-based reinsurer RenaissanceRe (RenRe), said today that the firm is encouraged with trading conditions ahead of the mid-year property renewals, with more balance between supply and demand when compared with the January 1st renewals.

Addressing analysts after the release of RenRe’s Q1 2025 results, which were strong albeit impacted by the costly California wildfires, executives at the reinsurer provided some commentary on the key mid-year reinsurance renewals.

On property, CUO Marra said that RenRe is deep in the process of quoting mid-year renewals, confirming that the company has, in some instances, already bound lines.

“Many of the clients impacted by the wildfires have traded with us for decades. Fire is a primary peril covered by the programs, and we have written this business profitably. We have learned from recent events and incorporated new information into our models, in time for Q2 renewals.

“Our confidence in our view of risk, access to efficient capital and willingness to quote earlier than others, makes us a first call market to the best clients, and gives us opportunities for differentiated terms and private deals,” he said.

When compared with the January 1st, 2025, reinsurance renewals, which saw some overall softening of rates, Marra noted that “supply and demand are more in balance” and that “trading conditions are more favorable” for sellers.

“The market remains attractive, and we have appetite to continue growing in property catastrophe, and we plan to deploy additional limit through mid-year. Our primary focus, however, is on margin. Through our underwriting system, each underwriter can see the return on capital on a deal by deal and even layer by layer basis, and the effect on our portfolio in real time. This empowers our underwriters to make disciplined, margin focused decisions that benefit our shareholders,” continued Marra.

The CUO also provided a brief overview of the firm’s experience at the Japan-focused April 1st renewals, describing the renewal as orderly and stressing that although rates were down about 10%, the business is still attractive at these levels.

During the Q&A, analysts quizzed Marra and RenRe’s President and Chief Executive Officer (CEO), Kevin O’Donnell, on the mid-year renewals, specifically whether rates are sufficient in the property cat space, the Florida market, and if the reinsurer sees enough opportunities.

“What we focus on is the adequacy of rates,” said the CEO. “I think, starting with property, from 2023 we increased rates on the property portfolio by 50%, we increased retentions, and we changed terms and conditions. And what we’ve said since then is, like any financial market, there’ll be ups and downs, but I think the important thing is, from a rate adequacy perspective, the property market is in exceptional shape compared to where it has been historically.”

Expanding on this, Marra reiterated that the Bermuda domiciled carrier feels “really good” about where the catastrophe market is and the opportunity it presents.

“Like Kevin said, the rates and retentions are some of the most attractive we’ve seen. Whether rates are up or down a bit it is less reliant on that. It’s more we’re confident that those trading conditions will continue.

“We have seen some renewals, and we’re encouraged by the trading conditions. It is more in favour of reinsurers than it was at 1.1, supply demand are more in balance than what we saw at 1.1. There is growing demand, and we’ve been able to construct a really nice portfolio so far, with the bulk of the renewals yet to come. We’ll have to go through those, but there’s a lot more renewals that are loss impacted,” said Marra.

The mid-year renewals is an important date for the Florida market, which has had its issues, although the market is hopeful that recent reforms will improve the state’s insurance market over time.

“Demand is growing in Florida, and pricing is strong,” said Marra. “So, it will be an opportunity. We have seen more risk move back into the private market from Citizens depopulating. That does increase demand, and the Florida Hurricane Cat Fund is increasing where it attaches, so that increases demand down below. So, all that plays to our strengths, and we’ll be able to provide solutions with the new demand, private deals, and things like that.”

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