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Key dynamics consist of increasing sum insured aggregates, changes in frequency or average expected loss, inflation expectations, pay-back of major losses and all compelling reinsurers to adjust their pricing strategies.

“Following several years of unsatisfactory returns, all reinsurers only had the objective to correct the pricing and, due to increased exposure and inflation, also increase the retention levels by the cedents,” said Sánchez Cea.

“Once these corrections have taken place and, following a satisfactory return in 2023 and an adequate first half 2024 (with exceptions), reinsurers are again looking for growth, but in our point of view this stability should still be maintained.” However, Sánchez Cea said the stability should still be maintained.

“The market is still highly volatile, and one or two years of satisfactory results are not sufficient to allow for major changes.

“We expect the market to maintain discipline in underwriting and risk selection despite the increasingly competitive market, maintaining exposure limits for catastrophe losses to preserve profit, and capital adequacy,” said Sánchez Cea.

Mapfre Re should remain technical, looking for continuity in the long term, he added.

“In order to be consistent, we have to be sustainable as an industry, providing not only pure capacity, but services that add value to our clients and to society as a whole.”

“Our main concern is the so-called ‘secondary risks’ that are affecting not only the European markets but also Asia. A weakening of underwriting discipline would reflect a more volatile appetite from reinsurers in the near future, as margins are not able to absorb the increase in losses,” he said.

Besides, with the increasing frequency of cat events and more intensity of secondary perils events, aggregate covers, while appealing to ceding companies, are becoming increasingly costly and less attractive to reinsurers.

“Our main concern is the so-called ‘secondary risks’ that are affecting not only the European markets but also Asia. A weakening of underwriting discipline would reflect a more volatile appetite from reinsurers in the near future, as margins are not able to absorb the increase in losses.” Javier Sanchez Cea, Mapfre Re

“A weakening of underwriting discipline would reflect a more volatile appetite from reinsurers in the near future, as margins are not able to absorb the increase in losses,” said Sánchez Cea.

Use of structured solutions and alternative risk transfer (ART) that have been becoming more mainstream in the harder market. Sánchez Cea said that they are complementary solutions but cannot substitute traditional reinsurance.

“Even in a softening market, the unique ability of ART solutions to offer tailored and innovative risk management strategies ensures they continue to be a valuable resource for many companies,” he said.

Capacity availability
Looking ahead, there is cautious optimism regarding available capacity, with a forecast for stability in the renewals of 2025.

“Our outlook for 2025, as of today, is stability and continuity of existing conditions. This will be analysed market by market, company by company, and treaty by treaty. There is still a need for improvement in several markets while for others we expect much more stability.”

Regarding, Mapfre Re’s growth and expansion plans in Asia Pacific, Sánchez Cea said the company sees significant opportunities in the region.

“Compared to other regions of the world where Mapfre Re is also active, we are still underrepresented in Asia Pacific, despite the fact that this is the second largest region for Mapfre Re. This is why our growth and expansion plans are important in each one of these countries.”

With a newly established branch in Beijing, the company aims to strengthen its presence and foster closer ties with the market.

“At Mapfre Re, growth must be accompanied by stability and continuity, so it may not be impressive from one year to the next, but it is relevant in the medium/long term. We want to grow, but above all we want to be a technical reference in the region,” Sánchez Cea said.

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