Kathmandu. Howden’s global reinsurance, capital markets and strategic advisory arm Howden Relay said those combining insurance market understanding with technical implementation, portfolio diversification and innovative structuring will be well-positioned to succeed in this next phase of the reinsurance cycle.
Houden Rico’s new “Who Dares Wins” report, released ahead of the 2025 RVS in Monte Carlo, notes that the reinsurance market is now facing a harsh to soft period. “While rates are easing, they remain structurally high amid high-risk premiums,” the report said.
Importantly, the report notes that this shift is coming from a position of historical pricing power. “This provides ample profit opportunities for those willing to innovate and underwrite selectively,” Howden Re said in its report. Still, reinsurance companies are at greater risk of net-cat losses, maintaining 62 percent of all modeled net-cat exposures as of Jan. 1. The Los Angeles fires in January caused the largest single loss suffered by reinsurers since 2011. This emphasized a balanced market. ’
As the tight reinsurance market enters a period of easement, earnings growth can no longer depend primarily on pricing momentum, the report said. “Instead, underwriters will need to innovate to maintain profitable expansion,” the report suggested.
While the damage lines remain challenging, reinsurers willing to innovate and take calculated risk can still generate financial returns, according to Howden Reilly. “Further growth opportunities exist in cyber, renewable energy and emerging markets,” Howden Riley said.
The report noted that the softening of the market after the intense pricing pressures of 2022-2023 provided short-term relief to sedants. “However, the transition from cyclical peaks to softer conditions requires careful guidance,” the report said, adding that renewal outcomes are increasingly shaped by data quality, transparency, and engagement in structure and coverage, rather than just price. ’
“Focusing on adjustments with the highest strategic and economic impacts, such as retention, overall protection, cost certainty or rebalancing reinsurance costs, can improve our chances of achieving meaningful outcomes in upcoming renewal discussions,” Howden Rea said. “The reinsurance cycle has evolved from a position of historic opportunity. “Capital levels have improved since the 2022 losses,” the report concluded, “but capacity remains cautious and focused.” ’
To remain resilient, the report recommends that cedents need to expand their financial instruments beyond traditional events. “This will include capital markets instruments designed to address overall cover, parametric triggers, multiline structures, and emerging sources of volatility,” the report said. ’
