Chris Killourhy (pictured), who became managing director of QBE Reinsurance in August 2022, says that “cautious optimism” best describes the state of the reinsurance industry in early 2024. Taking the industry’s temperature, he saw that a favorable environment was being created by the increasing number of reinsurers releasing strong results for 2023 following a protracted period of difficulty proving they had covered their cost of capital.

The realization that even if 2023 was a strong year for the industry, one strong year does not make up for four or five unfavorable ones is what’s tampering with the optimism and enthusiasm. He stated that the market should be asking itself if the previous year’s performance was unusual or if it demonstrated a level of discipline that will lead to additional proof for capital providers that reinsurers can yield steady profits.

Is the market hitting a ceiling on growth?

“The other part of this is that a relatively benign US wind season helped 2023, despite the fact that it was a significant year for secondary or non-peak perils,” he said. Therefore, I believe it’s important for everyone to realize how much of the positive outcomes we’re seeing in 2023 are due to that.

“There are further factors influencing the attitude in 2024, such as the increased availability of property capacity for deployment this year. And that, in my opinion, has less to do with adding capacity—that is, with large capital raises or entering new markets—than it does with businesses that most likely chose to keep their capacity idle and not use it in 2023 in order to see if the market would reach a sustainable point. Now that they are certain of the sustainability of the rating, they are prepared to use it on January 1, 2024.

According to Killourhy, this is a solid endorsement of the state of the market as it stands, as is the fact that the January excess capacity didn’t result in a notable decline in rates or modification of attachment points. Since this extra capacity is only available when the rates and attachment points are appropriate, he issued a warning, urging the market to maintain its vigilance and discipline to avoid major changes in terms, conditions, and rates.