Despite the fact property catastrophe reinsurance rates have moderated somewhat, analysts at Jefferies said the market remains attractive and they do not classify it as soft given pricing remains above 2022 levels at this time.
Commenting on the property catastrophe reinsurance market after the mid-year 2025 renewals, the Jefferies equity analyst team highlight the influx of capital that helped to moderate pricing and make renewal outcomes more favourable for buyers.
“Increased capital deployed outpaced rising demand (estimated at ~10% increase in limit purchased) as increased capacity from newly formed reinsurers/syndicates/ILS funds more than offset incremental purchasing by cedants,” the analysts explained.
They highlight the very strong catastrophe bond issuance seen to-date, which as we explained recently has led to a new annual record being set by Artemis’ data.
Larger transactions and new sponsor entrants have helped to drive the catastrophe bond market to its record highs, but the Jefferies analyst team also think pricing remains attractive here despite some softening being seen.
“Despite larger transactions and new entrants in the market, CAT bond spreads, or pricing, have come in slightly since 1Q25 but are stable with 4Q24,” they explained.
While rates-on-line have fallen across many catastrophe reinsurance renewals this year, the analysts continue to see value in the sector for underwriters.
“Despite moderating rates, we believe property CAT returns remain attractive and do not view the market as soft given pricing is above 2022 levels,” the Jefferies team wrote.
Adding that, “Further, returns in Florida remain favorable despite pricing pressures relatively recent given tort reform.”
Jefferies analysis aligns with our recent article on a Peel Hunt report, which concluded that the inflection point into a full soft reinsurance market remains two to three years away.
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