Global reinsurance capital surpassed $635bn at the nine-month point of 2023, according to Aon.

Aon has issued its take on the 1 January reinsurance renewal, suggesting a “relatively smooth” experience for most cedants, as reinsurance capital and risk appetite have grown in the past year.

2023 to 2024

A rebound in profitability and capital positions, and greater availability of retrocession capacity had helped make a more orderly renewal than a year prior.

The broker’s latest Reinsurance Market Dynamics report revealed that many reinsurers displayed increased risk appetites at the enhanced terms established in 2023.

Higher primary insurance pricing provided support in most areas, Aon said, offset by continued uncertainty around the impact of climate change, inflation, litigation funding, and geopolitical risk on ultimate loss costs.

These unknowns are creating headwinds to new investment, Aon noted, despite the expectation that most reinsurers will have easily covered their cost of capital in 2023.

Demand for reinsurance capital was robust during the renewals period, according to the broker, due to an erosion in insurance capital as a result of natural catastrophe losses.

These had introduced more volatility into underwriting results and brought increased rating agency scrutiny for many insurers.

Events included severe convective storm activity in the US and Italy; windstorm Ciaran in France; flood losses in New Zealand; flood and wildfire losses in Greece; a major earthquake in Turkey, and Hurricane Otis in Mexico.

Countering these losses was a strong reinsurance capital supply: Aon estimated shareholders’ equity reported by global reinsurers increased by $35bn to reach $532bn over the nine months to 30 September 2023.

“The January 2024 reinsurance renewal sets the stage for an interesting year ahead. Demand for property catastrophe reinsurance remains strong at the start of 2024, supported by inflation and exposure trends,” Aon said.

With alternative capital at an estimated $103bn, total global reinsurance capital was estimated at $635bn at the nine-month point, Aon said.

Contributing to the increase in alternative capital, in 2023 the catastrophe bond market grew by over $7bn, a 21% increase over the outstanding issuance amount in 2022.

The cat bond market recorded the largest-ever level of catastrophe bond issuance, at $15.4bn. There were 30 issuing insurers and 14 issuing reinsurers during the year, for a combined issuance of $10.1bn.

Government entities were also very well supported, with $4.8bn of issuance, Aon noted.

During the renewal period, casualty reinsurance capacity was seen to be ample against concerns over prior-year reserve deterioration and adverse litigation trends, according to Aon.

“As capacity continues to build, there will be opportunities for insurers to buy additional limit at the top of programs, and for reinsurers to work with intermediaries to support clients challenged with retained losses, especially from secondary perils,” Aon said.

“In the current environment of strong reinsurer results, we must continue to work collectively to strengthen the value proposition that reinsurance offers to our clients globally,” the broker added.

To view Aon’s Reinsurance Market Dynamics report, visit: