There’s guarded relief in the industry that the down cycle, for now, is not abrupt and that insured losses appear manageable
Advises reinsurance and insurance leaders globally on organization transformation, portfolio strategy, and sustainable growth
Works with European reinsurers and commercial insurers on growth strategy, organizational change, and technology-driven transformation
Leads work with reinsurance and commercial insurance carriers in North America on growth strategy, technical excellence, and technology adoption
The reinsurance industry’s annual “Rendez-Vous de Septembre” in Monte Carlo, a fixture on the calendar since 1957, is a great place to take the pulse of the industry—and after spending a few days talking with a wide range of participants, we can report the mood is relatively upbeat. The expected cyclical downturn has not been as abrupt as some feared, and while there have been some major losses this year—including from the Los Angeles wildfires in January—the full extent of insured losses (for now) still seems manageable this year. AI and its possibilities for reinsurance was very much a talking point, with many telling us about their use cases for it. And M&A is back on the agenda.
Here are the six main themes we observed at the event:
- A softening market, but no cause for panicThe reinsurance market is cyclical and after two to three years of “hardening,” with double-digit increases in rates that allowed reinsurers to restore their returns on capital, the long-anticipated softening is upon us. But so far, the industry seems to be gliding into this softening, with no panic or abrupt free fall at this stage. That is a cause of guarded relief in the industry, especially at a time of so much uncertainty about geopolitics, interest rates, and the overall state of the world. Buyers are, of course, happy there is price pressure, while sellers are happy the pressure is manageable. Still, the year has another three and half months to run, and the upcoming hurricane season will be crucial to defining the outlook into next year.
- No panic, either, about insured losses from natural catastrophesJanuary’s massive wildfires in the greater Los Angeles area at a terrible cost to lives and livelihoods were also a blow to the industry, with insured losses estimated at $50 billion to $80 billion. But since then, natural catastrophes have followed a more typical trajectory, leading many in the industry to anticipate total losses for the year of about $150 billion. That is in line with losses in recent years, and is starting to feel like a new normal. Again, hurricane season will be a determining factor.
- M&A is back on the agendaM&A largely dropped off the reinsurance agenda in recent years, as part of a broader downturn in market activity, but in Monte Carlo, mergers were once again the talk of the town as organizations look to pursue the benefits of scale in reinsurance.
