Howden Re reports stabilising market at June 1 with risk adjusted rates down by up to 20%

By Scott Vincent

May 29 - (The Insurer) - Reinsurers have shown a modest increase in appetite at the June 1 renewals with risk-adjusted rate changes ranging from flat to down 20%, Howden Re said on Thursday.

The reinsurance broker said blended risk-adjusted property catastrophe excess of loss rates-on-line were down 10%.

For loss free programmes, reductions typically ranged from 10% to 15%. Loss affected programmes typically ranged from renewing flat to down 10%.

Howden Re said expanding supply had outpaced rising demand, with programmes generally attracted subscriptions above 100%.

This has in turn allowed cedents to negotiate the more stringent terms and conditions that have characterised recent mid-year renewals.

As a result, the broker said remote-attaching catastrophe XoL layers have seen rate reductions in the range of 10% to 20%.

Kyle Menendez, managing director at Howden Re North America, said: "The dynamic this year was neither a continuation of 2023’s dislocation nor a broad softening. Rate levels remain historically high but are now outpacing loss trends in many areas.”

“This is drawing more interest from markets, including Lloyd’s syndicates with previously cautious balance sheets looking to grow incrementally.”

The broker said the most competitive pricing came at top layers, where surplus ILS capacity led to greater rate reductions.

Howden Re said a distinct feature of this renewal was the strategic cohesion observed across programme placements. Cedents purchasing multiple layers or products on a concurrent basis found greater support from reinsurers willing to underwrite holistically rather than transact tactically, the broker said.

The broker said the June 1 renewal reflects a market “transitioning from disruption to disciplined recalibration.”

This evolution has been supported by a stabilising legal and regulatory framework in Florida, coupled with a 20% increase in retention levels at the Florida Hurricane Catastrophe Fund.

This drove cedants to seek private market solutions for lower layers, Howden Re said, with pressure on rates at these levels largely mitigated by increased appetite from traditional reinsurers who now view them as attractive after years of caution.

David Flandro, head of industry analysis and strategic advisory at Howden Re, said: “Capital is now more abundant and increasingly diverse, yet it’s being deployed with discipline, especially below the FHCF where pricing remains firm.

“At the top of towers, ILS are providing flexibility and competitive tension, marking a shift from crisis to calibration. This is a function of a stabilising market.”