Aon expects over $7.5bn of additional US property cat reinsurance demand at mid-year renewals

As reinsurance capital continues to grow and keep pace with increasing demand from buyers, broking group Aon’s Reinsurance Solutions arm expects more than $7.5 billion of additional US property catastrophe limit demand at the mid-year renewals.

The June and July reinsurance renewals are key for the US property cat market, and despite an active first quarter for catastrophe losses, driven by the extremely costly California wildfires, Aon expects the conditions seen at the 1.1 and 1.4 renewals to persist, “supported by the weight of reinsurance capacity and unfulfilled reinsurer appetite.”

The broker’s April 2025 reinsurance market dynamics report states that there is sufficient capacity ahead of the mid-year renewal season.

In fact, according to Aon’s analysis, reinsurance capital reached a record $715 billion in 2024 on the back of strong retained earnings in the traditional market and a record year for catastrophe bond issuance, which helped take alternative capital to a new high of $115 billion.

Data and commentary from re/insurance brokers on the Japan-focused April 2025 renewals reveals increased appetite from sellers and in general more favourable pricing and conditions for buyers when compared with the prior year.

“April renewals in Asia Pacific saw a continuation of the favorable market conditions present at January 1. Following relatively benign natural catastrophe loss activity in Asia, reinsurers deployed additional capacity at 4/1. As a result, insurers enjoyed healthy reductions, particularly in Japan and South Korea, where risk-adjusted property catastrophe rates achieved double-digit reductions. Previously challenged areas, such as per-risk covers, also enjoyed more favorable pricing, as insurers leveraged property catastrophe business and reinsurer growth ambitions to garner more holistic support,” said George Attard, CEO, Asia Pacific, Reinsurance Solutions, Aon.

Aon expects these trends to continue ahead of the mid-year renewals, although it remains to be seen what impact the California wildfires has on rates. Undoubtedly, California wildfire reinsurance pricing will increase given industry loss estimates of between $35 billion and $50 billion, but only time will tell if the wildfires lead to hardening in other areas of the US property and property cat market, or whether the event limits any potential softening, which occurred at both 1.1 and 1.4.

“Reinsurance capital continues to grow and keep pace with increasing demand. Heading into the mid-year renewals, we expect over $7.5 billion of additional U.S. property catastrophe limit demand, mostly due to a healthier Florida market and the depopulation of the state windstorm insurer Citizens. We also anticipate some additional reinsurance purchasing from U.S. national carriers looking to mitigate further major net losses during 2025,” said Attard.

Reinsurers posted strong results for 2024 following robust earnings in 2023, and with pent-up supply still outstripping demand, “the mid-year represents the last major renewal opportunity for reinsurers to meet 2025 growth targets and earn premium to offset losses in the first quarter,” explained Attard.

Adding: “For insurers, current market dynamics are creating opportunities to explore frequency protections and top-up covers in an increasingly favorable pricing environment. Some clients are taking advantage of favorable market conditions and securing capacity at attractive rates ahead of mid-year renewals.”