Property cat nonetheless worthwhile as we enter laborious market softening part: Howden Re

As per David Flandro, Managing Director, Head of Trade Evaluation and Strategic Advisory at reinsurance dealer Howden Re, “if it wasn’t apparent already, we at the moment are firmly within the laborious market softening part of the score cycle.”

These feedback had been delivered alongside the discharge of Howden Re’s overview of the reinsurance trade within the first half of 2025, the place property disaster dynamics featured closely.

The report underscores a transparent market cycle shift, with softening charges rising regardless of continued underwriting self-discipline and aggressive demand for worthwhile enterprise.

“In case you have a look at all traces, or most traces, we’re nonetheless more durable when it comes to pricing than we had been 5 years in the past, nevertheless it’s evident that we’ve softened lately,” Flandro defined.

Michelle To, Managing Director, Head of Enterprise Intelligence, Howden Re, added: “We’re seeing insurers report decrease charge change resulting from higher competitors for beneficial enterprise, signaling a shift available in the market cycle. Regardless of this, capital returns stay robust, sustaining investor optimism.

“Disaster losses, notably from the LA wildfire in Q1, proceed however are manageable, serving to keep underwriting margins and solvency. Insurers are responding with strategic, centered underwriting to prudently deploy capital to navigate these aggressive circumstances.”

Furthermore, Howden Re’s evaluation aligns with CEO commentary throughout the second quarter reporting season, which identified that whereas softening has begun, this follows a interval of elevated pricing in 2023. As such, property and property cat stay each engaging and worthwhile.

“We’re previous the pricing peak. Our knowledge present how underwriters are responding to the laborious market softening part,” added Flandro.

The charts under are from Howden Re’s report. The chart on the left is on a cumulative foundation worldwide, whereas the chart on the appropriate is the US charge submitting image.

Furthermore, the reinsurance dealer’s report reveals that in property disaster, charges had been down 5% year-on-year in H1 2025, but premium development was robust at +15%. An identical, although much less marked, development was seen in property, the place premiums rose 3% regardless of a 1.4% decline in charges over the identical interval final 12 months.

Disaster exercise, led by the Los Angeles wildfires in Q1 2025, drove pure disaster losses to a decade excessive of $81 billion in line with Howden Re’s figures.

Nonetheless, a quieter second quarter meant that underwriting margins remained manageable and solvency robust.

Moreover, To acknowledged how world insurance coverage composite capital “remained regular” within the first half of 2025.

“This has been due primarily to capital development offset by dividends and share buybacks. Capital ranges at the moment are considerably increased than they had been on the trough of 2022 resulting from robust profitability and asset development. On stability, this creates extra capability, contributing to aggressive pricing dynamics,” she defined.

In his closing remarks, Flandro reiterated that it needs to be clear that the pricing peak is prior to now.

“We’re firmly in a brand new part of a cycle. And on this part, entry to world prime tier market knowledge, when it comes to pricing, claims, purchaser behaviour and crucially profitability, by area and line of enterprise is important for proactive, strategic planning. The pricing tailwind has abated with the intention to develop prime line profitably, innovation is important,” he defined.

Concluding: “In abstract, first half earnings and capital returns have been robust, and there’s a whole lot of optimism about ahead earnings for 2025, and normalised mixed ratios in ’26 and ’27. However once more, all of that is taking place in an setting of laborious market softening. That is when danger choice involves the fore.”