In this article from (Re)in Asia, Tony Gallagher, CEO, Asia Pacific, talks about capacity returning in the Asian natural catastrophe (nat cat) market amid increased rates. The article notes how last year a number of reinsurers pulled back from the market, following several years of high natural catastrophe losses in the region. The article goes on to discuss how Guy Carpenter research indicates that capacity utilization in Asia increased from 108% in January of 2023 to 137% by July, demonstrating how many reinsurers have recapitalized and are now willing to write more natural catastrophe business.
“At the January 1 renewals in 2024, capacity utilization could be even higher,” Tony said. “So, yes, you’re seeing a return of capacity to the nat cat market.”
He goes on to describe how January 1, 2023 renewals were “very unusual,” with extensive debate over how much capital players were willing to commit.
“At January 1, there were still a lot of standoffs about what the retention will be, what the rates will be, what the coverage will be,” Tony continued. “By the time you got to July 1, people were more confident with the structures, more confident with the rates and more confident to commit.”
“The Asia cycle was a market change, not a cat-driven change,” he explained.