How global reinsurers fared in 2024

Revenue growth for the global reinsurance market remained strong for the full year of 2024 at 8.1%, supported by higher rates in property and casualty reinsurance, according to the Gallagher Re Reinsurance Market Report released last month.

Global reinsurance dedicated capital totalled US$769 billion at 2024 FY, an increase of 5.4% versus the restated full-year 2023 base. Growth was driven by non-life alternative capital and INDEX companies — dozens of large and small reinsurers that contribute more than 80% of the industry’s capital, according to Gallagher Re.

“Global reinsurers reported strong 2024 results with a continued capital build driven by strong retained earnings,” the report says. “The reinsurance industry’s reported and underlying ROE (return on equity) remained well above the cost of capital, supported by further improvement in the underlying combined ratio and increased recurring investment income.

“The industry is well positioned to deliver strong results in 2025, and further meaningful capital growth.”

The reported ROE remained strong at 17%, albeit lower than 19.5% at FY 2023. “Despite improved underlying underwriting profitability and higher running investment income, the underlying ROE remained stable at 13.9% due to headwinds outside P&C reinsurance,” Gallagher Re says. “Without this, the underlying ROE would have been approximately 15%.”

Gallagher Re’s in-depth analysis of a subset of 16 reinsurers shows the reported combined ratio further improved to 86.8% for the 2024 full-year from 87.3% in the full-year of 2023. This was driven by a strong improvement in the underlying combined ratio to 93% from 96% in 2023 FY.

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“Reinsurers are well-positioned to maintain strong profitability in 2025,” Gallagher Re says. “Assuming a ‘normal’ level of natural catastrophe losses, we expect an underlying ROE of around 15% and a headline ROE of approximately 18-19%.”

The California wildfires have resulted in substantial insured losses early in the year. Morningstar DBRS reported Apr. 7 approximately US$12 billion of claims have already been paid out as of March 5.

Gallagher Re says insured loss estimates from the California wildfires are estimated at US$35 billion to US$40 billion. The larger reinsurers are guiding for losses to consume between 25% and 33% of annual budgets, but the reinsurance industry can still deliver a strong ROE in 2025.

“But even if these losses prove to be incremental to annual NatCat budgets, reinsurers are well-placed to deliver headline and underlying ROEs which are roughly double the industry’s cost of capital.”

Reflecting the continued strong profitability, traditional reinsurance capital is on track to increase by 6% in 2025, the report says. “Resilience of the reinsurance industry materially improved over the past three years, driven by significantly improved underlying profitability.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.