Several major ILS markets successfully raised capital for mid-year retro deals: Aon

With reports suggesting a more balanced and stable retrocession renewal at the mid-year, broker Aon’s Reinsurance Solutions unit has said that a number of major ILS markets successfully raised new capital to deploy into mid-year retro deals.

The mid-year renewals typically see less retrocession buying than we see in the first-quarter of the year, but there have already been reports that retro demand was higher at the mid-year in 2024.

Aon explained, “Supply remains robust with sufficient retro capital available from both traditional and ILS providers through Q2 renewals.”

Adding that, “A number of Q1 buyers sought to expand their purchasing strategy with additional products and layers in the approach to U.S. wind season.

“The market noted a handful of new and returning buyers accessing products to mitigate their concerns and hedge positions in light of forecasts for the upcoming 2024 Atlantic hurricane season.”

Which echoes comments made by other brokers and analysis over the last week.

But Aon also cited fresh capital raises, that have helped some ILS players grow their retro portfolios at the mid-year, it seems.

“Several major ILS markets successfully raised additional capital for mid-year deals and in general executed their capacity at acceptable returns to support a positive impact to their existing 2024 portfolios,” the reinsurance broking unit of Aon said.

“As a result, risk-adjusted rate change broadly tracked 2024 averages.”

This has been achieved despite the forecasts for a very active Atlantic hurricane season and Aon noted that, “While many have forecasted this season to be active, it’s been promising to see strong investor fundamentals drive continued growth of the ILS market.”

These additional ILS capital raises focused on retrocession will have been helpful to what has turned out to be a much more balanced retrocession market at the mid-year renewals, assisting in soaking up some of the additional demand for protection seen and no doubt enabling reinsurers to enter the wind season with better protection in some cases.

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