Insured Loss Activity Under Scrutiny by Guy Carpenter
In the dynamic world of reinsurance, 2025 has shown an intriguing blend of softening rates, high competition, and robust performance, as reported by Guy Carpenter. This leading global risk and reinsurance specialist, a business of Marsh McLennan (NYSE: MMC), has provided an analysis of the sector that paints a picture of a market where rate softness and high competition coexist with solid revenue growth and strongly profitable reinsurance operations, despite elevated insured losses.
The mid-year renewals have seen a softening of reinsurance rates. However, returns on equity (ROE) remain robust and above the cost of equity, suggesting continued profitability for reinsurers. Guy Carpenter expects a steady capital growth of 5% to 7% for reinsurers by the end of 2025, despite global economic volatility and insured losses close to $70 billion in the first half of the year.
The company's Q2 2025 financials reflect this trend. Guy Carpenter posted a 5% organic revenue growth, with revenue reaching $677 million. This contributed to a larger increase in underlying revenue by 4% for the quarter in the Risk & Insurance Services segment.
The global insurance market is experiencing rate declines in most regions and product lines, a trend of falling prices for four consecutive quarters, except for casualty insurance, which is seeing rate increases, especially in the US. The competitive environment is characterized by ambitious growth targets among major insurers, supported by improved coverage options and favorable reinsurance pricing conditions.
In other news, Pool Re, Britain's leading terrorism reinsurer, has completed a competitive tender process and awarded the contract for reinsurance broking services to Guy Carpenter. The placement provides £2.75bn of aggregate excess of loss cover, increased from £2.4bn. Pool Re has awarded Guy Carpenter a renewed reinsurance broking contract for three years, with an option to run to five.
Notable reinsurers participating in Pool Re's new retrocession programme include Hannover Re and The Fidelis Partnership. Under the new contract, Guy Carpenter will support Pool Re in their reinsurance activities.
Pool Re's placement marks another success for Guy Carpenter, reinforcing their position as a leading player in the reinsurance market. As we move forward in 2025, the reinsurance sector continues to evolve, and Guy Carpenter's insights will undoubtedly provide valuable guidance for stakeholders navigating this complex landscape.
In the reinsurance sector, underwriting activities remain crucial despite softening rates and high competition, as Guy Carpenter's robust performance and profitable reinsurance operations demonstrates. The company's success in securing the reinsurance broking contract for Pool Re, Britain's leading terrorism reinsurer, further underscores their role in the finance side of the business.
