Reinsurers 'well equipped' for slightly above-average 2025 hurricane season: Acrisure Re

By Rebecca Delaney

May 30 - (The Insurer) - The reinsurance market is "well equipped" to manage another slightly above-average hurricane season in 2025, even following the LA wildfires and intense severe convective storm activity, Acrisure Re said on Friday.

However, the broker warned that an exceptionally severe season would place "meaningful pressure" on the balance of capital supply and reinsurance demand.

Forecasts have pointed to above-average activity in this year's Atlantic hurricane season, which officially begins on June 1.

The broker said insured losses from last year's two notable U.S. hurricane landfalls, Helene and Milton to total around $40 billion, lower than some earlier estimates.

"Thanks to several years of market hardening and improved terms and conditions, the reinsurance industry is now in a much stronger position to absorb the impact of events like Helene and Milton. These two hurricanes have been treated more as earnings events rather than capital events," the broker said..

"Reinsurance capital is at an all-time high, and reinsurers’ composite returns on capital exceed the cost of capital, further supported by strong investment income. Currently, there is more capital supply than demand in the reinsurance market."

The outlook noted that following a decline in U.S. property catastrophe reinsurance rates by 5% to 15% on a risk-adjusted basis at the January 1 renewals, as well as further declines at the mid-year Florida renewals, reinsurers continue to hold firm on higher attachment points, although there have been some improvements in terms and conditions.

It added that investor demand for cat bonds in the ILS space remains very strong, which is a key reason why the upper and middle layers are well-capitalised.

"Looking ahead to the 2026 renewals, much will depend on weather activity. With abundant capital and increasing reinsurer appetite for property catastrophe risk, a quiet hurricane season would likely place additional downward pressure on rates," said Acrisure Re.

"The market appears well-equipped to manage another slightly above average hurricane season, even alongside the earlier impacts from the LA wildfire and a notably intense severe convective storm season. However, an exceptionally severe hurricane season would likely place meaningful pressure on the balance between capital supply and reinsurance demand."