​Reinsurers set to continue delivering profits despite falling premium rates

Reinsurers are set to continue delivering profits despite falling premium rates at the 1 January renewals, Fitch Ratings has said.

The ratings agency’s review of the renewal period showed that premiums fell after years of hardening rates.

It said the lower prices reflect an abundance of capital, with reinsurers increasing risk appetite and having a desire for growth.

However, it said market conditions remain supportive of strong risk-adjusted returns.

“Reinsurers entered 2025 in a position of strength, with capitalisation buffers and reserve adequacy bolstered by the record profits of the past two years,” Fitch added.

“Capacity was also enhanced by an influx of capital from traditional reinsurers and institutional investors, attracted by the sector’s strong underwriting returns.

“Despite the rate reductions, we expect the sector’s premium income to increase in 2025, driven by higher volumes.”

Howden report

This came after Howden said that the 1 January 2025 reinsurance renewals experienced notable softening overall.

The broker’s Past the Pricing Peak report, published on 1 January 2025, said that favourable supply dynamics have become evident across both the commercial insurance and reinsurance markets over the last 12 months.

”These dynamics played a pivotal role in the 1 January 2025 reinsurance renewals, fostering competition that led to risk-adjusted rate reductions in several areas,” Howden said.

Tim Ronda, chief executive at Howden Re, added: “Encouragingly, our clients are beginning to see relief from the pricing pressures of the last three years in several segments.

“Even with this relief, we believe that end risk takers can continue to generate strong returns and provide a stable and long-term source of efficient capital.”