I'll start by just giving some high-level insights in terms of the trends that we're seeing in Europe before handing over to both Victor and Kiran to give their insights from a property and casualty perspective respectively. Just starting from an overview, maybe looking through the reinsurance lens, what have we seen in Q1? Certainly it's fair to say the market was more perhaps orderly, a more smooth and orderly renewal than we've seen in previous quarters.
Ample capacity in most areas and increased appetite from reinsurers led to certainly a more softening in certain sectors, such as property, ample capacity in areas such as marine and cyber, although still perhaps a bit of caution in areas like casualty and aviation, which I know Kiran will touch upon shortly.
All of this is despite 140 billion of insured losses that were incurred during 2024. Just over 50 billion of losses in Europe alone, predominantly from flooding. We've seen in a number of different territories in Europe. So even with those significant losses that the market's seen, we did see a very steady, smooth, stable reinsurance renewal for Q1. And that, in turn, has continued to see a more stable approach in the domestic market in Europe.
Most countries across Europe, we've seen a return to more stability in most of the areas, really driven by increased capacity, a number of existing markets who are being very aggressive on their retention, plus as well a number of new markets coming into our region. And that's really creating more competition, which is obviously great for our clients, and really putting a more sort of stable approach.
And in some areas, rate reductions in certain sectors. We'll hear a little bit around the property and casualty side, but we're certainly seeing stability in areas like construction, cyber, and D&O continue to see rate reductions in most areas. All those signs that that's starting to bottom out perhaps, but still ample capacity in most areas. So from that point of view, we'll certainly expect to see a continued stability from a European market perspective, continued rate reductions in a number of areas as well.
From a market point of view, certainly seeing carriers continuing their focus around underwriting discipline, particularly around cat exposures, but equally concerns around inflation, supply chain, obviously, with the most recent tariffs that are creating an element of trade war around, around the world, that's going to create a little bit of uncertainty from a market perspective. And of course, the geopolitical landscape in Europe and around the world continues to provide caution for markets and clients alike.
But overall, the market in Europe remains stable. Good for our clients with some really good opportunities to seek alternative options, to seek new capacity, and new markets in certain areas. So with that, I'll hand over to Victor, our property expert. And Victor, maybe you can provide your insights from a property perspective in Europe, the trends perhaps, that we're seeing, and maybe what clients can expect during the course of 2025.
VICTOR DE JAGER: Hi, Nick. Thank you for handing over to me. And I think you described well what we also see in the property market. So indeed, there is a huge growth ambition with insurers, which, of course, creates competition. Like you said, it varies per country, or even sometimes in market segments, or occupancy classes. But there are some overarching themes, of course.
With the growth ambitions, do we see more capacity in the market, which puts pressure on pricing. And then again, it gives you that focus on retention by some markets. So for our clients, we see that there's a real focus on program design, getting the right data. Our risk and analytics tools can provide also some insights there to create the right program structure, which is very important.
We also see the long term agreements being back in the market, which is also very positive, I think, for clients to give them more budget certainty in the longer run. But of course, it also aligns with what we see with carriers with their growth ambitions that they want to secure, a certain level of income for the longer run. There's still some disciplined underwriting.
It doesn't mean that growth just shows we can write everything as carriers say, especially around the catastrophic events. As you highlighted, there has been some events which were having an impact and which can still give volatility to portfolios. So especially there, good analytics will help to provide solutions by the market and also focus on supply chain challenges because of the geopolitical environment. There is a lot of volatility in that area.
But in essence, there is a softening market. Growth ambitions are there. There are options for clients. And yeah, we can support in that sense with providing insights, helping program design, and bringing the right risk to the right market, as we like to say. I think with that is a short summary of the property market.
KIRAN NAYEE: From the casualty market and the casualty market outlook, we're seeing a really interesting marketplace with casualty seen as a profitable line of business following a period and a number of years of remediation. And certainly, when looking at Europe, whilst it's always difficult to generalize across the region and some variations remain, overall, we're seeing a much more positive rating environment for our buyers.
There's a lot more investment in casualty as insurers strive for top line growth. This is also leading, as you said, Nick, to some new entrants, particularly in the MGA space as insurers look to enhance their portfolio spread. So yes, casualty is seen as a profitable line of business. However, there are ongoing concerns about long-term rate adequacy.
Overall, we're seeing reduction of rates, but that does depend upon the quality of risk and the occupancy. However, it is fair to say that some headwinds remain. US exposures in particular and continuing social and economic inflation and the corresponding impacts on claims causing insurers headaches and concerns. Legacy exposures and reserve increases, especially in the US, increasing nuclear verdicts and class actions, and concerns around social and economic and inflation, as I said.
Also, some uncertainty around new and emerging risks or growing risks, PFAS being a good example of that, and then emerging risks such as climate change, social media, and artificial intelligence, and just how the market can address those. With Europe in particular, some concerns around collective readdress, class actions, and the upcoming European products liability directive. And some concerns around how that might manifest itself, either by way of claims will ultimately remain.
Also, from a coverage point of view, we're seeing a maintenance of discipline on breadth of cover offered, both through management of capacity in terms offered, extended coverage, such as US auto and recall financial loss still remain challenging to get, and insurers are pricing for it. But overall, there is growing competition and abundance of capacity, which is causing downward pressure on rates, especially for good occupancies.
So, Nick, I think you said, how do buyers capitalize on these market trends and what to look for going forward? Yeah, look, the current market is definitely a good environment, definitely good news for buyers. But certainly on the more difficult risks, it is really important that there is a robust program design and marketing strategy in place to maximize on this and to maximize on the competition in the market to get the optimal premium.
So the quality of submission remains key. Early engagement with the insurers and good quality, consistent data. Victor talked briefly on the importance of modeling and analytics, hugely important. I'd encourage buyers to work towards solutions as opposed to simply renewal expiry, making sure the program is relevant, driving coverage, extensions, et cetera. In short, there's a real opportunity to enhance the relevance of placement and programs, ensuring the cover is in place to reflect the client's exposures and profile industry needs.
Definitely, capitalize on the insurers needs to grow. Make sure you're accessing the full extent of the market, both the reinsurance and the direct. And I think, as I say-- so by way of summary, the market is in a good place. It is, to an extent, suffering. There are headwinds, but there are also opportunities. So hopefully, that helps.
NICK HOLMES: Fantastic. Thank you, Kiran. Thank you, Victor. Really valuable insights. And yeah, probably from-- to summarize, the sounds of things is a good market for buyers. Certain areas perhaps we need to remain a little bit sort of cautious from a regulatory point of view, but equally from an occupancy from an exposure point of view. Work with the broker, and for us to really work with clients as well to ensure that we're presenting alternative options. But a good market overall for clients, which is and long may that continue. So with that, Kiran, Victor, thank you very much for joining this podcast. Thank you all for listening, and see you all very soon. Thank you, everyone.
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