Rates fell in the January reinsurance renewals, in some cases down to 2022 levels, as excess capital drove “fierce” competition, according to global brokers.

The January treaty renewal season is dominated by European and US buyers, ahead of the June renewals when most Australian property catastrophe reinsurance programs are negotiated.

Howden says risk-adjusted global property catastrophe reinsurance rates on line fell 14.7% on average, the biggest reduction since 2014.

“Most areas of the reinsurance market recorded price decreases at January 1 renewals, returning pricing across most major lines to levels last seen around four years ago … reinsurers’ desire for growth meant supply was more than sufficient to absorb demand,” Howden said.

“With core programs placed for less spend than anticipated … and with strong signings, some cedents secured supplementary coverage to manage retentions and reduce volatility, while others plan to deploy their savings to purchase additional protection in the first half of 2026.”

Howden and fellow global intermediary Aon say the California fires early last year and Hurricane Melissa in October had little impact on reinsurers’ risk appetite.

Aon notes insurers capitalised on the buyers’ market.

“Record-breaking capital and a benign hurricane season set the stage for fierce competition ... exacerbated by growing appetite from third-party capital providers for insurance risk.

“Competition was particularly fierce in the US property catastrophe market, with preferred risks typically achieving strong double-digit rate reductions.”

Aon’s Reinsurance Market Dynamics report says reinsurer capital reached a new high of $US760 billion ($1.13 trillion) at the end of September, driven by retained earnings and record levels of third-party capital.

“Capital was abundant, with supply significantly outstripping demand,” the report says. “Capacity has also flowed into the market via new players in the form of start-up reinsurers and managing general agencies, which continue to gain traction and bring further competitive tension to renewals.”

The report notes reinsurers demonstrated greater flexibility and desire to write risks that were previously outside or at the periphery of their appetite.

“Insurers are now in a commanding position … We expect some insurers will return to the market post-renewal to take advantage of favourable market conditions and explore additional protections to reduce earnings volatility, including aggregate products and structured solutions.”