Insurance Market Overview

Thrilled to announce the launch of our Gallagher Re 2023 Natural Catastrophe and Climate Report. Link: https://lnkd.in/gdcKPzt4 2023 was a year marked by the dominance of so-called “secondary” perils and continued record-setting weather/climate phenomena that were enhanced by the arrival of a strong El Niño phase of the El Niño-Southern Oscillation (ENSO). The direct economic cost of natural hazards was USD357 billion. The private insurance market and public insurance entities covered an USD123 billion of that total. There were a record 66 individual billion-dollar economic loss events. The 34 individual billion-dollar insured loss events also set an annual record. A significant portion of the insured losses resulted from the severe convective storm (SCS) peril. The SCS peril topped USD71 billion in 2023, of which USD60 billion occurred in the US alone. This occurs at a time when the usage of the words “primary” or “secondary” to define individual perils is increasingly called into question. Exposure management is an essential piece to underwriting and portfolio analysis, and with continued growth of new population / exposed properties into high-risk areas for natural perils and increased climate change influence, it is quickly changing how we view risk in many parts of the world. While the largest tropical cyclone or earthquake (“primary”) events will continue to drive the highest individual loss costs, we can no longer dismiss the potential significance of every other (“secondary”) peril occurrence. This is especially true for some insurance carriers who now view “secondary” perils as their primary portfolio risk. Moving forward, a more appropriate way to bucket perils is likely to be the usage of “peak” or “non-peak”. Such discussion is likely to be more relevant for individual companies to identify which perils are “peak” to your portfolio. For companies with more regional risk focus versus one with a global view, this can also allow a more targeted and effective way to communicate an internal or external portfolio risk profile. Finally, we continue to witness the ongoing influence of climate change on the behavior of individual events and broader weather patterns. The need to implement proper planning and investment strategies, plus meet net-zero carbon emission or portfolio transition targets to limit further atmospheric and oceanic warming, grows more urgent. This is especially true as 2023 was the warmest year on record in the modern era dating to 1850. Scientists believe it was the warmest year in the last 125,000 years. A big shout-out to main co-authors Brian Kerschner and Jin Zheng Ng, and many other Gallagher Re colleagues (notably Marie Ekstrom) who contributed. The report was in the great hands of our Marketing and Communications colleagues (Eileen (Jodlowski) Shannon, Sara Carlson, Molly Sullivan, Sophie García Halliday, and Mark Cobley). 

World's 50 largest #Reinsurance Groups AM Best Principal Takeaways • Munich Re is the largest IFRS 17 reporting reinsurer, followed by Hannover Re and SCOR • Swiss Re is the largest non-IFRS 17 reporting reinsurer, followed by Berkshire Hathaway and Lloyd's • The global reinsurance industry is in the midst of a generational hard market that has driven the significant growth for many reinsurers. • The transition to #IFRS17 diminishes the comparability among reinsurers. • On June 10, 2024, AM Best revised its outlook for the global reinsurance segment to Positive from Stable—the first time we have had a Positive outlook on the segment. Over the past two decades, AM Best’s reports have outlined major developments in the global reinsurance segment and ranked the players in the market. Most years, changes have been modest. However, this year, the implementation of IFRS 17 has caused a re-engineering of the rankings due to the lack of comparability introduced by the new accounting standard. To that end, this year’s list of the top reinsurers looks different than it has in prior years, as the analysis has evolved to provide the most relevant rankings possible. The hard market conditions reignited by Hurricane Ian and substantial secondary peril events in 2022 resulted in a continuation of significant rate increases as well as a tightening of terms and conditions that continued through the 2023 renewals. Additional factors in 2022—such as mark-to-market unrealized fixed-income investment losses, loss cost and social inflation, and global macroeconomic uncertainty—caused a substantial imbalance in reinsurance supply and demand dynamics. In aggregate, these factors resulted in significant growth in premium volume, underwriting income, and net income. #rvs2024 https://lnkd.in/eA8KD9Ss

US property & casualty outlook: the past weighs on the present - Our outlook for the US property & casualty #insurance industry in 2025 is evolving. Underlying performance remains strong, but #tariffs present a major risk to the forecast, especially in personal lines affected by auto and construction loss cost shocks. Personal auto insurance regulatory filings for rate decrease have mostly stopped following the April 2nd tariff announcements. We see this as early signal for the industry reacting to the expected pressures on loss costs.   Natural #catastrophes and reserves uncertainty create additional risks. The California wildfires were a large loss to start the year, adding roughly 3 points to the industry net combined ratio for 2025, depleting nearly half of the industry's annual catastrophe budget (~8 pts). Rising construction costs due to tariffs add upside risk to property claims pressures.   Liability reserves additions in 2024 affected profitability for social inflation-affected lines and may indicate more adverse development to come. US insurers added USD 16 billion to prior years' liability loss estimates during 2024 reserve reviews. Over the past decade (2015-24), total adverse development of USD 62 billion for commercial liability lines (excluding medical professional liability) represents a collective under-estimate equivalent to the damages from two major hurricanes.   Sector growth will decelerate toward longer-term averages, as tariff-driven inflation is partly offset by slower economic growth. We expect premium increases of 5% in 2025 and 4% in 2026, with return on equity (ROE) at 10% in both years. https://lnkd.in/eWuMk9vX

Gallagher Re first view available for 1/4. EXECUTIVE SUMMARY   The April 1 renewal activity saw more capacity and optionality for buyers, specific to class of business, geography, performance, strategy and scale. The reinsurance industry has reached a record traditional capital high of USD655 billion, supported by strong reinsurer results in 2023 and 2024. Many reinsurers are expecting attractive underwriting results and double-digit ROEs in 2025, assuming natural catastrophe losses stay within their 2025 budgets.    Growth and shareholder returns Reinsurers are eager for growth but are tempering stakeholder expectations regarding the extent of growth achievable in 2025. There is a noticeable trend of increased dividends and share buybacks as reinsurers address demands to utilize excess capital effectively.   Primary market conditions and catastrophe events  Primary companies have experienced varied fortunes over the past two years, influenced by localized losses and portfolio remediation efforts. The California wildfires serve as a poignant reminder of insurance's critical role in rebuilding lives and economies. These events raise questions about secondary perils and the necessary oversight for efficient market functioning.   Regional insights: Japan  Japan's headline rate changes indicate accelerated softening compared to major international renewals. Historical high catastrophe pricing post-2018 and 2019 typhoons has led to favorable conditions for buyers in 2024. Reinsurers' strong growth desire across various lines contributed to this positive movement.   Specialty markets and future outlook In specialty markets, the settlement of Ukraine/Russian aircraft leasing losses has prompted reserve increases among specialty (re)insurers. The global reinsurance market is expected to continue its differentiated approach to risk-adjusted rate reductions, focusing on maintaining profitable accounts while addressing loss-making ones.   Conclusion The pressure on reinsurers to demonstrate profitable capital deployment will intensify unless reinsurance demand increases over the next nine months. Reinsurers face choices between enhancing shareholder returns through dividends and buybacks or pursuing growth via mergers and acquisitions. While smaller acquisitions are gaining momentum, larger-scale M&A in the reinsurance sector remains a possibility. #insurance #reinsurance

Reinsurance is no longer what it used to be. And neither is the world it’s meant to protect. Old model of risk transfer is cracking under the weight of a world that’s hotter, faster, and more interconnected than ever before. In 2023 alone, global natural catastrophes caused $380B in economic losses with 23 events crossing $1B each. Cyber risk exploded too, with the CrowdStrike glitch crashing 8.5 million systems, reminding us that black swan events no longer wait a generation they now arrive back to back. We are witnessing a new trend. Reinsurers, after years of heavy losses, have started to pull back. Rates are up. Attachments are higher. Aggregate covers are disappearing. And trust? It's now being earned through data precision, not legacy relationships. Primary insurers are being squeezed from all sides: more risk retained, tougher contracts, and a workforce rapidly aging out with 50% set to retire by 2028. Furthermore many insurers are still trying to negotiate AI era risks with spreadsheets built for another century. Result? Unrecoverable reinsurance claims, audit failures, and missed opportunities. But there are solutions which can stem this decline . Automating insurance workflows can offer speed and simplicity. AI and LLMs can extract and analyze complex contract data in seconds. International placements can unlock better terms, if systems are ready to support . Thus if we look closely, complete mindset shift has become need of the hour to effectively explore and implement these solutions. Final take? Reinsurance isn’t a back office function anymore. It’s strategic, real time, and deeply consequential. Real winners of this contest will be those who treat data as currency, technology as muscle, and trust as the only true capital in a fractured risk landscape. Refer attached report for detailed insights.⬇️ #ReinsuranceReimagined #InsuranceLeadership #InsurtechShift #FutureOfRisk

𝗥𝗶𝘀𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆 𝗶𝗻 𝗣&𝗖 𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲—𝗪𝗵𝗮𝘁’𝘀 𝗡𝗲𝘅𝘁 𝗳𝗼𝗿 𝗜𝗻𝘀𝘂𝗿𝗲𝗿𝘀? Property & Casualty insurers are facing an unprecedented mix of economic pressure, regulatory scrutiny, and climate-related risks. The industry is rethinking risk models, underwriting strategies, and profitability levers. This new KPMG US report highlights five key challenges reshaping P&C insurance and what insurers must do to navigate rising complexity and drive long-term resilience. 🔹 Economic volatility → Inflation and rising claims costs continue to squeeze margins. 🔹 Regulatory pressure → Increased oversight and evolving compliance requirements demand agility. 🔹 Climate-driven risks → Extreme weather events are making traditional risk models obsolete. 🔹 AI & data analytics → Insurers must move beyond experimentation and fully integrate AI-driven underwriting. 🔹 Evolving customer expectations → Personalized products and digital-first experiences are no longer optional. P&C insurers must adapt or risk falling behind. The challenge is clear: how can insurers drive profitability while managing rising complexity? 📌 Read the full report: https://lnkd.in/eqBzMgrw. #KPMGInsurance #PropertyCasualty #RiskManagement #InsurTech #AIinInsurance

Specialty Insurance Market Trends: What’s Prominent so far in 2025? The specialty insurance market continues to evolve, and 2025 is already showing notable shifts compared to last year. Based on my own observations and conversations across the market, here are some key developments shaping the landscape: 1. Modern Delegated Underwriting Platforms There’s a clear move away from legacy systems toward more agile, scalable DUPs. I’m seeing strong traction with platforms like VIPR, BindHQ, Watertrace, and Genasys, especially as firms seek better data handling and compliance. 2. Pricing and Rating Engines While Rulebook and Radar remain widely used, HX Renew has gained significant attention over the past 18 months, with many carriers now trialling or adopting it to support real-time, data-driven pricing. 3. Underwriting Intelligence & Digital Distribution There’s increased focus on using data to improve underwriting decisions and expand reach through enhanced e-trade platforms, enabling faster, more efficient digital distribution. 4. Finance Transformation & Regulation Finance transformation remains a priority, with the rollout of new ERP systems, accounting hubs, and tools to align with US GAAP and IFRS 17 requirements. 5. Growth Through M&A, Expansion, and IPO Readiness M&A activity is up, with firms pursuing international growth—particularly in North America, the Middle East, and APAC. There’s also growing interest in IPO planning at board level, reflecting long-term growth ambitions. 6. AI: Early Adoption and Cautious Discovery AI is on the radar, with early adopters making moves. That said, many are still in the discovery phase, exploring how to implement it effectively amid questions around readiness and integration. These are just a few of the trends I’ve observed so far in 2025. I’m sure there are others I’ve missed, if you have additional insights or thoughts, I’d love to hear them.

Why 90% of the Fortune 500 Now Use Captives... and What That Means for Risk & Capital When more than 90% of Fortune 500 companies run a captive insurer, Boards are sending a clear message: resilience can’t just be bought off the shelf. Captives are no longer niche. They’re structural. They’re how companies are: ✔️ Replacing rigidity with flexibility ✔️ Using their own balance sheets to control predictable risks ✔️ Building platforms to test new coverages, access reinsurance, and even co-insure with peers This isn’t corporates walking away from insurance. It’s corporates reshaping it. What Leaders Must Know: ✅ Captive ownership has surged from under 50% in 2000 to ~90% of the Fortune 500 today. ✅ Mid-market companies are now catching up fast. ✅ Captives improve claims speed, enforce stronger data discipline, and even reduce EPS volatility. ‼️ Every dollar into a captive is a dollar not returning to the traditional pool, unless carriers, reinsurers, and capital markets engage with them, not against them. ➡️ The future is not “captives vs carriers” but captives + carriers + capital markets. Together, that’s how we build resilient risk-transfer systems fit for modern Boards. Why It Matters for AkinovA & Clients: At AkinovA, we see our role as bridging these three worlds: 1️⃣ Helping corporates leverage their captives more effectively. 2️⃣ Enabling insurers and reinsurers to re-engage with high-quality premium that might otherwise be lost to self-insurance. 3️⃣ Bringing capital markets alongside, not as a substitute, to expand liquidity and resilience and accessing structured risk flows aligned with corporate needs. 🧠 Boards aren’t simply asking for lower premiums. They’re asking for resilience they can trust. Those who can deliver it, collaboratively, will remain relevant. Those who can’t risk being left behind. 👉 Full article here on Substack: https://lnkd.in/egKSV6KT #CaptiveInsurance #EnterpriseRisk #CorporateResilience #InsuranceInnovation #AlternativeRisk #RiskTransfer #InsuranceLinkedSecurities #BoardStrategy #CICA #RiskCapital #StrategicResilience Captive Resources, LLC Captive Insurance Companies Association Vermont Captive Insurance Assn Self-Insurance Institute of America Bermuda Business Development Agency (BDA) Bermuda Captive Network Guernsey Finance David Bubb JP Boulus Jim Furio Jesse Olsen Nicholas J Hentges MBA, CIC Richard Cutcher

The life insurance industry just hit a terrifying milestone: More than $1 Trillion in liabilities has been transferred offshore. Private equity firms aren't just buying insurance companies anymore, they're reshaping how the industry manages risk by pushing liabilities to jurisdictions with lighter regulations and lower capital requirements. In case you’re not already familiar with reinsurance, it’s basically insurance for insurance carriers. A (frequently offshore) reinsurance company takes on a portion of the carrier’s risk of payouts in return for a percentage of premiums. Reports released in the last few months by A.M. Best and S&P Global Market Intelligence show US life insurers have now shifted more than $1 trillion of liabilities to places like Bermuda, the Cayman Islands, and Barbados. For every dollar of reserve on a carrier’s balance sheet, there’s now $3.28 of credit from reinsurance. That number more than doubled since 2020. 🐟 Athene (Apollo) has transferred $193 billion to offshore affiliates 🐟 Global Atlantic (KKR) manages ~$190B of insurance liabilities, "the majority of which resides in Bermuda" 🐟 Prudential moved ~$7B to Bermuda just this year and previously sold $31B to Fortitude Re 🐟 MassMutual is now offloading liabilities offshore alongside the PE-owned carriers 🐟 MetLife launched Chariot Re and immediately moved ~$10B to it 🐟 Lincoln Financial formed Lincoln Pinehurst Reinsurance Company in Bermuda last year And the risk is real. A private equity-owned Bermudian reinsurer called 777 Re collapsed last year and the US insurers that ceded billions to it got burned. This is why we analyze the carrier just as much as the policy performance when making recommendations, and why independent analysis is more critical than ever before. If your clients have policies with any of these carriers, when was your last independent review?