MILLIRE ENG2024

Global Reinsurance Market and Milli Re The earthquake that struck Japan’s Noto Peninsula on January 1, 2024, with a magnitude of 7.5, was one of the most devastating natural disasters of the year. Striking at a shallow depth, the earthquake triggered tsunami waves reaching up to four meters in parts of the peninsula, causing widespread destruction. While the total economic cost of the event is estimated at USD 12 billion, insured losses amounted to approximately USD 2 billion. With 505 fatalities, the disaster also became Japan’s deadliest earthquake since the Great Tohoku Earthquake in 2011. Despite the elevated level of global natural catastrophe activity, benefiting from substantial price corrections and increased program attachments in previous years, reinsurers continued to post improved underwriting results in 2024. Mainly driven by strong retained earnings, traditional capital increased by USD 40 billion in the first nine months of the year and reached USD 602 billion. Moreover, declining global interest rates also played a crucial role, as valuation gains in investment portfolios directly contributed to stronger equity positions for reinsurers. The alternative capital market also reached an all-time high of USD 113 billion by the third quarter of 2024, reflecting strong investor confidence in Insurance- Linked Securities (ILS) as a reliable and resilient asset class. Catastrophe bonds were a key driver of this growth and with USD 17 billion issued in 2024, the total outstanding catastrophe bond market reached USD 47 billion. Furthermore, minimal global catastrophe losses sustained by the ILS market in the last two years contributed to strong profits with premium adequacy and limited claims payments, further enhancing the attractiveness of the ILS market to investors. As a result, the total of traditional and alternative reinsurance capital rose to USD 715 billion from 2023 year-end figure of USD 670 billion by the end of September 2024. Despite geopolitical uncertainties and a series of impactful natural disasters, following substantial price corrections and structural changes seen in recent years, the January 2025 renewals signaled notable shifts in market dynamics, marking a transition from hard market conditions of recent years to a more stable and balanced environment. With increased profitability and strong returns, reinsurer appetite remained strong. As a consequence, capacity was more than adequate across most lines and regions, leading to improvements in pricing and terms for the majority of the placements. Although reinsurers were more flexible and willing to accommodate the needs of individual cedants, differentiation being a key driver, programs and clients had been assessed individually based on factors such as transparency, data-quality, performance and strategy. On the other hand, driven by volatility in loss experience, changes in risk views and increasing sums insured with the ongoing inflationary pressures, demand continued to remain strong. Taking advantage of favorable market conditions with abundant capacity, many cedants managed to optimize their reinsurance structures, secured additional protection and achieved greater alignment both in terms of price and conditions across their panels. While reinsurers As a result, the total of traditional and alternative reinsurance capital rose to USD 715 billion from 2023 year-end figure of USD 670 billion by the end of September 2024 62 MİLLİ RE