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Renewals and purchases of catastrophe retrocessional protection saw their pricing soften faster than property catastrophe reinsurance at the June and July 2025 mid-year renewal season, which tilted the market in the favour of retro buyers this year, analysts at Autonomous have highlighted.
It suggests increased capital and capacity was available for deployment to retrocessional opportunities at the time, as well as rising appetites for the risk.
Which Autonomous’ analysts note provided an opportunity for some reinsurers to buy more protection, given there was a delta between the pricing across their overall portfolios and the retrocession market at mid-year.
In the primary reinsurance space it’s been well-documented that the top-layers of towers saw the most price pressure, while lower layers have seen their pricing hold up better at the renewals.
Recall that, Howden Re, the reinsurance broking arm of Howden, said that risk-adjusted property catastrophe reinsurance rates-on-line fell in a range from flat to down 20% at the June 1st renewals.
The broker specifically called out ILS capacity as adding flexibility and competitive tension in top-layers of towers, with remote-attaching cat XoL layers among those that saw the steepest rate reductions, typically in the 10% to 20% range, while riskier layers saw pricing fall less.
When it comes to retrocession though, there are a number of different and in some cases large capital providers and markets that have a particular appetite for these opportunities, an appetite that has been increasing, we hear.
As a result of which, even though retro opportunities typically see capital deployed at risk-return levels more akin to mid to lower layers of primary reinsurance towers, the softening is said to have been more acute in the retro space.
We’re told that a number of traditional retro markets exhibited greater appetites for risk at these mid-year renewals in 2025, while also finding some new opportunities given some incremental retro purchases, as well as top-ups to loss affected programs.
Autonomous’ analyst team highlighted that this presented buyers with a market opportunity, enabling them to expand their retro protections should they choose.
“The supply-demand balance for global retro continues to tilt in the buyers’ favour, which is a positive for the bottom-line of the reinsurers as they can choose to purchase more cover for the same cost, or be more efficient in their purchases,” the analysts explained.
As we reported recently, another factor that helped retro capacity at the mid-year reinsurance renewals was the fact some market participants took a commercial view on collateral trapping, enabling more capital to be recycled more quickly and boosting the overall availability of retrocession.
Read all of our reinsurance renewal news coverage.
Retrocession softens faster at mid-year 2025 renewals, tilts in buyers favour: Autonomous was published by: www.Artemis.bm
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