The January 1 renewal trend continued in Japan-focused April 1 reinsurance renewals, with Gallagher Re reporting no losses on Japan’s real estate catastrophe plans, leading to lower risk-adjusted rates in the range of -15% to -17.5% as buyers took advantage of strategic opportunities.
Reinsurance broker Gallagher Re’s latest First Edition report examines the important April renewal season, highlighting the reinsurance industry’s resilience amid geopolitical uncertainty, primary market weakness and an unpredictable economic outlook.
For cedants, Gallagher Re highlighted the strategic opportunities in the current market cycle and the opportunity to reinvent risk transfer programs in an effort to build structural resilience and improve portfolio economics while cutting costs in a more favorable environment.
According to Gallagher Re, buyers achieved significant risk-adjusted rate reductions in the real estate and professional sectors on April 1, while casualty rates were broadly stable.
The report found that outside of Japan, housing disasters elsewhere resulted in risk-adjusted interest rate declines ranging from minus 7.5% to minus 25%, reflecting an acceleration in interest rate declines on January 1.
In terms of casualties, in Japan, plan pricing focused on recognizing significant mitigation of U.S. exposure, which resulted in a slight increase in average risk-adjusted but a reduction in total treaty premiums, the broker said.
“Clients have the opportunity to take advantage of the current window to reduce costs and build structural protections that will prepare them for whatever comes next,” said Tom Wakefield, global CEO of Gallagher Re. “Gallagher Re’s analytical depth, market relationships and structural creativity are helping clients turn current conditions into lasting advantages.”
Ultimately, Japanese buyers entered the 1.4 renewal season “confident in the ongoing benefits of their significant portfolio overhaul” and Gallagher Re believes they have been rewarded.
The reinsurance broker said that in the current climate, cedants should not just accept lower rates to meet the coverage they require, but should instead focus on taking advantage of opportunities to build structural resilience into their portfolios.