April 1 brings ‘welcome reprieve’ for Japanese buyers: Howden Re

By Scott Vincent

April 1 - (The Insurer) - Japanese cedants benefited from a "welcome reprieve" at this year’s April 1 renewals following several years of upward rate pressure, according to reinsurance broker Howden Re.

In a statement on Tuesday, the broker said the April 1 renewals had seen risk-adjusted reductions of between 10% and 15% on catastrophe excess of loss programs.

Ceding commissions for proportional earthquake cover increased by approximately 2 percentage points on average, indicating improved terms, while per-risk commissions varied by program performance, the broker said.

Howden Re said reduced limit was purchased at the lower end of programs with some cedants seeking additional top-layer limit to address specific risk concerns.

Andy Souter, head of Asia Pacific at Howden Re International, said: “This renewal is, on balance, a welcome reprieve for buyers in Japan and throughout Asia Pacific on the back of an extended period of significant rate increases.

“With the recent easing in pricing and stable renewals, it’s a good time for cedents to secure more favourable terms and address specific risk concerns.”

Howden Re said reinsurers had sought to protect or grow positions in the lead-up to the Japan renewals, with cedents successfully leveraging support for harder-to-place programs amid higher competition and greater supply.

This follows a period of market-driven and post-loss hardening, commencing in 2018 and 2019 in the wake of losses from typhoons including Jebi, Hagibis, Trami and Faxai. This year’s California wildfires did not meaningfully constrain supply at April 1, the broker said.

The outcome is in line with forecasts from commentators who spoke to The Insurer in the run-up to the renewals.

Elsewhere, Howden Re said global specialty renewals saw varied outcomes.

Aviation reinsurance rates on line were flat, signalling price stability compared to the 3.5% year-on-year reduction observed at January 1, the broker said.

Marine and energy losses in 2024 were well spread with no major impact on programs, while terrorism reinsurance rates-on-line reduced modestly as direct market conditions softened.

Howden Re said direct and facultative treaty markets showed further softening although reinsurers displayed greater discipline while capacity deployment was focused across towers despite recent loss activity.