Reinsurance buyers were unable to avoid the variable but universal price corrections driving rates up at the April 1 renewals, according to the latest 1st View renewals report from Gallagher Re, the global reinsurance broker.

Issued three times a year, the publication delivers the very first view on market conditions within the reinsurance industry at the key renewal seasons: January 1, April 1 and July 1.

The April 1 renewals have a focus on the Asia Pacific region, notably Japan, which is home to some of the world’s largest catastrophe reinsurance placements.

The renewal was challenging, the report said, with buyers facing similar discipline from the reinsurers to that seen at January 1.

It noted: “In some cases, particularly within smaller markets that had escaped previous rate hikes, significant structural changes were imposed by reinsurers. These dramatic adjustments may have impacted ceding insurers’ financials profoundly.”

James Kent, global chief executive officer of Gallagher Re, said: “No particular geography was immune from the price corrections that reinsurers maintained throughout the April 1 set of renewals.

“We saw an enhanced pricing impact based on individual client’s performance and their reinsurer relationships, but even the most favoured clients paid more, with reinsurer discipline being evident across the market.

“Capacity was adequate to get cedants’ exposures covered, but April renewals are an inappropriate yardstick for the market’s overall supply-demand relationship as it is so heavily weighted towards Japanese exposures, which are significantly lower than the peak US exposures.

“But we certainly didn’t see any meaningful new capacity, or any other indication that reinsurers are prepared to cede their hard-won pricing territory any time soon.

“The combination of catastrophe losses and mark to market investment losses in 2022 means reinsurers will continue to coax the market towards rates which will help returns exceed the cost of capital.”

Key findings of the report include:

•The market has faced similar discipline to that seen at January 1, although with a more intense focus on pricing and contract improvements across all territories and to all business lines

•Capital remains constrained with limited signs of new capacity entering the market and existing reinsurers facing mark-to-market investment losses

•In Japan, long term reinsurer relationships, aided by improvements in primary underwriting, led to a better alignment of client and reinsurer expectation

•The supply/demand dynamic was finely balanced but overall buyers managed to secure sufficient capacity

•Similar to January 1, the Casualty treaty market remained calm and logical, though continued concern regarding US ‘nuclear’ award verdicts are increasingly coming to light on US casualty placements, including some treaties with incidental US exposures

•ILS issuance is picking up due to capital constraints in the traditional market, although at higher pricing than traditional indemnity pricing