Broker reports: US cedants benefit from ample property cat capacity at April 1

By Chris Munro

April 1 - (The Insurer) - Property catastrophe capacity for U.S. cedants was in ample supply at the April 1 renewals, according to broker reports, although the fallout from the California wildfires tempered the level of reductions as reinsurers took a more conservative approach.

April 1 was the first major renewal since the wildfires that tore through parts of Southern California in January.

Although it is a relatively light renewal date for the U.S. market, several regional, national and global carriers do come to market to secure their reinsurance at April 1.

According to Aon’s latest Reinsurance Market Dynamics report, “property catastrophe capacity at 4/1 remained adequate to meet demand”.

Rival intermediary Gallagher Re in its 1st View: Finding the Path update said “property catastrophe capacity remained ample” at April 1.

Aon said “to its credit” the reinsurance market “stepped up” in the wake of the wildfires, which the broker noted will cost the industry between $32 billion and $38 billion.

“The majority of reinsurers responded outstandingly to the Los Angeles wildfires, which will likely rank among the top three costliest wildfires in U.S. history,” Aon said.

During the April 1 renewal, Aon said reinsurers continued to price and quote for wildfire-exposed accounts, even as events were ongoing.

The reinsurance broker said terms and conditions around wildfire were a key topic of discussion with reinsurers at April 1 as each insurer determined with their trading partners the most effective path forward for their portfolio exposure.

“Despite the significant loss, reinsurers continued to price risk, deploy capacity, and support clients in what was an orderly renewal,” Aon said.

It added that the Los Angeles wildfires “tempered reductions and led to more conservative quoting at 4/1, although the impact was largely localised”.

“Reinsurers that took the opportunity to increase capacity and lean-in to wildfire risk at 4/1 were rewarded with increased participation on programs,” Aon said.

Those programs unaffected by the wildfires achieved risk-adjusted rate reductions at April 1 that were in line with those seen at the start of 2025.

“Loss-impacted accounts typically experienced stable conditions,” Aon added.

In its market update, Gallagher Re said nationwide account dynamics at April 1 broadly continued along similar lines to January 1, although the reinsurance broker said reinsurers “were highly focused” on the impact of the California wildfires.

“Buyers focused on differentiating both approach to the peril/geography and the outcomes from the event(s),” Gallagher Re said.

The number of programs in the market for renewal that were actually affected by the fires was limited, but Gallagher Re said specific outcomes were dependent on the buyer’s loss experience and program size.

Reinsurers, Aon said, continued to demonstrate growth appetite, while alternative capital provided “healthy competition” and startups were on the hunt for new business.

Gallagher Re made a similar comment, and said buyers took advantage of the increased capacity on offer to hold retention levels steady and push for price reductions at the top end of their programs.

“The increase in total property capacity also resulted in increased aggregate excess of loss demand and market placements,” Gallagher Re said.

“Several carriers sought to bolster existing aggregate programs, while others looked to establish new programs. That said, these aggregate protections continue to be pitched at the capital preservation, not earnings protection level,” the Tom Wakefield-led reinsurance broker said.

In the per-risk market, Gallagher Re said capacity and pricing were tighter than in the catastrophe segment.

Outcomes “remained highly dependent on experience”, Gallagher Re said,. It added that large global or national programs were challenged by a lack of new supply entering the per-risk sector.