MILLI RE 2023 ANNUAL REPORT
GLOBAL REINSURANCE MARKET AND MİLLİ RE country within two-weeks is estimated to be around USD 4.3 billion. With combined insured losses reaching up to USD 2.9 billion, the two events gave rise to the costliest industry losses recorded in New Zealand since 1970. Increasing by 8%, total of traditional and alternative capital rose to USD 635 billion from 2022 year-end figure of USD 590 billion by the end of September 2023. Despite the increased frequency and severity of the secondary perils in recent years with the heightened risk of climate change, given the significant rate increases secured throughout 2023 coupled with upward adjustments in program attachment levels, as well as the recovery in investment returns, reinsurers saw significant improvement in underwriting margins. Mainly driven by the retained earnings and gains on investment portfolios, traditional capital increased by USD 35 billion during the first nine months of the year and registered as USD 532 billion. With favorable rate environment attracting new investors, alternative capital rose above the USD 100 billion level for the first time and reached USD 103 billion as at 3Q 2023. As 2023 marked a turning point for the industry highlighted by significant price corrections and structural changes, in line with the new market dynamics set throughout 2023, January 2024 renewals were relatively stable. Even though the current pricing levels constrained the cedants, demand for property reinsurance continued to remain strong driven by ongoing inflationary pressure on sums insured. Although capacity was materially restricted a year ago, with the help of improved terms and adequate pricing, supply was at a sufficient level to meet demand at January 1 2024. Despite a more orderly market, pricing trends for property catastrophe reinsurance renewals showed great variation across regions. While reinsurers insisted on substantial rate hikes in markets such as Italy and Türkiye that suffered from significant losses in 2023, risk-adjusted global property catastrophe rates-on- line ranged from flat to up by more than 100%. Nonetheless, compared with previous year, many buyers managed to align pricing on their panels and minimized differences in conditions. There was generally strong reinsurer appetite for peak perils and upper layers, yet competition from the catastrophe bond market was also evident. Although program attachment levels remained stable in general, some regional players, especially European cedants saw further increases on the back of recent loss activity. Apart from terms, discussions around conditions were more consistent and constructive during renewals this year, with some buyers able to secure broader coverage and achieve consistency in wordings across their panels. Following the withdrawal of some market players in recent years, placement of per-risk covers continued to be challenging. 58 MİLLİ RE
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