P&C reinsurers saw strong earnings in H1 2024 – Morningstar DBRS

Global property and casualty reinsurers have reported solid premium income growth in the first half of 2024 (H1 2024), owing to an ongoing environment of favourable pricing.

That was according to a report from credit ratings agency Morningstar DBRS, which has maintained its positive outlook on the global P&C reinsurance sector “despite high natural catastrophe losses and likely lower interest rates globally”. 

Total aggregated net income for the market saw a 25% year-on-year increase in H1 2024 – rising from £8bn ($10.3bn) in H1 2023 to £10.1bn ($12.9bn) in the most recent period.

The aggregate combined operating ratio (COR) for the market rose slightly year-on-year however, from 85.7% in H1 2023 to 86.1%. 

Morningstar explained that this “modestly higher, albeit still low” ratio was influenced by frequent, midsized natural catastrophe events in Q2 2024 and added that reinsurers’ performance would likely “remain relatively unscathed” through likely H2 2024 natural catastrophe events because of “robust capital reserves, previous exposure reductions and higher pricing actions”. 

Favourable pricing environment

In its assessment of the industry, Morningstar looked at the financial performance of a selection of the world’s largest reinsurers – of this selected group, all reinsurers except Swiss Re and Partner Re reported “solid top-line growth as a result of the ongoing favourable insurance pricing environment and conservative underwriting terms”. 

The ratings agency added that property and specialty businesses remained “particularly attractive” to reinsurers because of strong market demand and higher pricing power. 

However, some casualty lines have reportedly become less attractive due to social inflation, leading to selective underwriting and reserve strengthening from some insurers. 

Reinsurers reported modest rate increases and slight volume gains from existing and new business relationships at the January and April renewals.