The reinsurance market showed mixed results at the January 2022 renewals as only loss-affected lines of business, such as property catastrophe, cyber or retrocession continued to see significant price increases, Fitch Ratings says in a new report.

Prices for loss-free market areas, such as casualty lines of business, were the same, or fell, as they benefited from an increase in available capacity.

In spite of more than $100 billion of natural catastrophe claims, both traditional and alternative reinsurance capital grew 3–4 per cent last year.

The alternative capital space saw very strong inflows into catastrophe bonds, in particular, while traditional reinsurers’ capital was helped by a better underlying profitability.

Fitch expects that the reinsurance sector will slightly improve its return on capital in 2022 to above the high-single-digit return forecast for 2021, reaching a level that is broadly in line with the industry’s cost of capital.

This comes on the back of another year of risk-adjusted price improvements in 2022, which Fitch estimates at about 1 per cent across the whole portfolio, assuming a normalised level of natural catastrophe claims. This is less than in 2021 but will still support the sector’s improving technical results.

Natural catastrophes caused approximately $101 billion of insured losses last year, while man-made losses accounted for $7 billion of claims in 2021. Total large losses were 54 per cent above the long-term average.

The special report January 2022 Reinsurance Renewals Mixed on Price Changes provides insight into recent developments in the global reinsurance market and is available at www.fitchratings.com