2025 Market Insights with Aspen Reinsurance CUO John Welch

We recently spoke with Aspen Reinsurance Chief Underwriting Officer, John Welch, about the global Reinsurance marketplace and his insights on the January 2025 renewal season: 

What are your general observations about the January Renewal Season for the Reinsurance Segment? 

The reinsurance industry has enjoyed a couple of years of very solid profitability.  Given the returns produced during 2023 and 2024, the amount of global reinsurer capital has increased by $140 billion, or 24%, over that time period according to Aon.  Contributing to this dynamic is a reinsured property catastrophe performance that was not far from expected, despite an estimate of $150 billion in global insured cat losses as reported by Gallagher Re.  While there continues to be elevated inflation, the increasing amount of demand for coverage was outstripped by this rapidly growing supply of capital.  This demand/supply dynamic created downward pressure across most products around the world.   

How did these industry market conditions impact some of the major product lines in January? 

Generally speaking, the property catastrophe market became noticeably more competitive.  We anticipated rates being down overall in the mid-single digits but saw them come down a bit more than expected.  From a regional perspective however, there was a range of outcomes. In Canada, for instance, rates increased in the mid-to-high single digits as a result of cat related loss activity. And, in Europe, there were pockets of rate strengthening due to specific cat events. Meanwhile in Asia, rates decreased more than twice was expected, given a favorable loss experience.  Despite being willing to compete on price, reinsurers did not compromise on the attachment point reset that took place in January 2023.  Reinsurance companies continue to think the market is priced above what is considered an adequate long-term return and thereby remains attractive. 

The property per-risk and proportional market exhibited similar dynamics with pressure on rates and increases to commissions. In particular, the underlying rates for cat exposed property business were down in the 10 to 15% range following a few years of significant increases.  The reinsurance market did maintain its discipline with respect to the amount of cat risk covered within these treaties. As is the case with the property catastrophe line, reinsurers continue to have conviction in the pricing of this business.  

Specialty lines such as Marine, Energy and Terrorism share many of the same dynamics as the property lines. There was a question earlier in 2024 as to whether the Baltimore Bridge loss would reach a level that would cause rates to increase for Marine, but this did not materialize. Similar to property, these classes remain well priced and attractive despite the surplus capacity dedicated to these lines by the reinsurance market. 

The casualty lines were somewhat more competitive than expected in January. There continue to be concerns about adverse development coming out of Accident Years 2015 through 2019 as a result of elevated loss inflation.  Accident Years 2020 through 2023 are being watched very closely as well. The reinsurance market’s response in January was to price in adverse loss development with higher rates and lower commissions on renewals. Conversely, the market rewarded those ceding companies that demonstrated a favorable loss track record. Underlying insurance rates re-accelerated in the second half of 2024 for the more challenged lines, which improved the economic outlook of this business in January 2025. Despite some headline reserve charges and public statements made by a handful of reinsurers about their plans to reduce their casualty underwriting, there continues to be an adequate supply of reinsurer capacity and no shortage of competitors. As with other lines, reinsurers continue to view this business as well priced depending on the cedent, the line of business and the region. 

Overall, the reinsurance market is moving through the pricing cycle from the peak profit margins realized in 2023 and 2024 to more modest but acceptable profitability for 2025.