Gallagher Re’s comprehensive analysis of the global reinsurance landscape in its full year 2024 report reveals notable trends in capital and profitability. Despite a decline in return on equity (ROE) from 19.5% in 2023 to 17% in 2024, the performance remains robust among a specific subset of companies. These companies are those that disclose relevant data concerning natural catastrophe losses and prior-year reserve releases.
In 2024, the subset of companies experienced a diminished benefit from below-normalized natural catastrophe losses compared to the previous year. The positive impact from these losses was 0.8 percentage points, a decrease from 1.7 percentage points in 2023. Additionally, prior-year reserve releases contributed just 0.5 percentage points in 2024, down from 1.3 percentage points the year before. Furthermore, capital gains also saw a reduction, with 1.6 percentage points in 2024, compared to 2.2 percentage points in 2023.
Gallagher Re notes that the contribution from prior-year releases is at its lowest in a decade, predominantly due to significant reserving actions by Swiss Re in the third quarter. Excluding Swiss Re, the prior-year experience actually surpassed recent years’ levels.
When evaluating the performance between the first and second halves of 2024, the headline ROE was approximately five percentage points lower in H2, where it was 19.6% in H1. Roughly half of this discrepancy is attributed to elevated natural catastrophe losses in the latter half of the year, driven by hurricanes Helene and Milton.
The underlying ROE was also significantly influenced by various factors, including reserve strengthening reported by Everest within its primary insurance portfolio. Although realized capital gains improved in the second half, they could only partially offset the increased impact of natural catastrophe losses and non-P&C Re underwriting activities.
In related developments, Gallagher Re’s report highlighted a 5.4% increase in total dedicated reinsurance capital during 2024, reaching a new peak of $769 billion. This growth was fueled by expansion in both traditional and alternative capital avenues.
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