The global reinsurance industry experienced a significant boost in profitability and return on equity (ROE) in 2023, leading to a 12% increase in capital to a record $729 billion, according to Gallagher Re’s 2023 Reinsurance Market Report. The annual report tracks the capital and profitability of the global reinsurance industry, analyzing 43 global reinsurers in the Gallagher Reinsurance Index, as well additional detail on 16 “subset” companies that disclose natural catastrophe losses and prior-year reserve releases. “Underlying ROEs were materially higher due to a further reduction in underly ..read more

Insurance companies saw better deals when renewing their reinsurance contracts on April 1, thanks to more competition among reinsurers and plenty of available coverage capacity, according to a report from insurance broker Aon. The report says this trend lays the groundwork for a reinsurance market that will be easier for insurers to navigate at midyear and heading into 2025 compared to the challenges faced in recent renewal periods. The April 1 renewal was particularly significant for Asia, with about 60% of the region’s treaty business renewing on this date. This included some of the world’s ..read more

The insurance-linked securities (ILS) market saw its capacity grow to approximately $100 billion at the end of 2023, driven by the absence of a major peak natural catastrophe event and ongoing efforts to de-risk portfolios from frequency risk, according to a recent analysis by AM Best. The ILS market recorded unprecedented returns in 2023. The Swiss Re Global Cat Bond Index reported a return of 19.69%, while the Eurekahedge ILS Advisers Index posted a return of 13.89%. These record returns were helped by favorable loss reserve developments on prior year events. For instance, the loss developme ..read more

In countries whose economies are still developing, high sovereign debt can present a barrier to government spending — even spending that might help improve their financial situation. And when essential services are underfunded, marine conservation can appear more like a “nice-to-have” than a “must-have.” But these same countries are often home to fragile marine ecosystems that play a vital role in their economies. Blue bonds are an emerging strategy to help reduce the burden of sovereign debt in countries with developing economies and funnel those savings into marine conservation programs that ..read more

The reinsurance market is showing signs of returning to normalcy, with rates for reinsurance catastrophe coverage stabilizing and a positive property insurance rate environment expected to persist in the first half of 2024, according to a recent analysis by broker Lockton Cos. LLC. The report indicates that the reinsurance market, which experienced difficult treaty renewals a year ago, is now seeing a leveling off in rates for catastrophe coverage, backed by&nb ..read more

In February, Dan Reynolds, the editor-in-chief of Risk & Insurance, caught up with Michael Berger, the Palo Alto-based head of Insure AI at Munich Re. The topic of the conversation was the risks presented by generative AI and how underwriters are approaching that risk. What follows is a transcript of that discussion, edited for length and clarity. Risk & Insurance: When we think about generative AI, there is a lot going on. But how do you see the risks that the technology presents? Michael Berger: There are different risks that come with generative AI. Some of the risks are basically t ..read more

The Insurance-Linked Securities (ILS) market concluded 2023 with a record surge in catastrophe bond issuance and robust investment performance, largely due to the absence of major catastrophic events, according to analysis by Swiss Re Capital Markets. The ILS market expanded by over 20% year-on-year, reaching $43.1 billion in 2023, up from $35.5 billion in 2022. This growth was primarily driven by a significant volume of maturing bonds and newly allocated capital. The year 2023 was relatively calm in terms of large catastrophic events, leading to expected losses being relatively benign for ILS ..read more

In October 2017, wildfires burned much of California’s wine country. The flames spread over vineyards, destroying crops and threatening nearby tasting rooms and operational buildings. Many fled, hoping to save their lives, if not their livelihoods. But Larry Chasin, CEO of PAK Programs, a specialty insurer that offers policies for vineyards, wineries and breweries, headed toward the blaze. He wanted to speak to as many insureds as possible, letting them know the carrier would be there for them as they filed claims to try to recover at least some of what was lost. Insured losses from the event ..read more

The U.S. property insurance market is facing one of the most difficult times in its history. Rates have continued to skyrocket over the past five years, peaking at an 8% increase in the third quarter of last year — the 20th consecutive quarter of rises — according to Marsh.  The latest spike has been driven by sharp increases in the treaty and facultative reinsurance markets at the midyear point. As losses from the Ukraine conflict and extreme weather events globally have continued to mount, this has culminated in significant hikes at the 1/1 renewals, resulting in what Howden Broking has ..read more

For all the anxiety over surging global inflation, it has knock-on effects that are likely to be positive for risk management in general, as well as for some insurers in particular. That insight, as well as other perspectives on coverage and pricing, were notable from the quarterly earnings reported by Greenlight Re. “Our second-quarter performance was strong,” said Simon Burton, chief executive officer. “Our underwriting combined ratio was 91.6%, a significant improvement compared to our performance the past couple of years.” An important driving factor in that performance was the completion ..read more