Jefferies: $100bn+ Loss Needed for Reinsurance Pricing Shift

A single loss event north of $100 billion would be required to materially shift reinsurance pricing, analysts at Jefferies said in a report. The call comes after property catastrophe rates declined 15–20% at the June renewals, continuing a three-year softening trend.

Early forecasts point to a below-average Atlantic hurricane season. El Niño conditions are expected to develop, and those typically suppress storm formation. Colorado State University meteorologists now peg the odds of a major hurricane making U.S. landfall at 24%, well below the 20th-century average of 43%. The chance of a major hurricane tracking into the Caribbean sits at 26%, compared with a 47% historical norm.

Jefferies noted that CSU's initial forecasts have a roughly 45% correlation with actual activity since 2014. That figure rises to about 55% when measured from 2020. The June forecast itself was trimmed from April's estimate.

The market backdrop is key. Hurricane Ian, which caused an industry loss of $50 billion-plus, drove a hard market in 2023. The subsequent moderation has been helped by strong retained earnings growth at carriers, a renewed growth orientation among ILS funds, and Florida market reforms that have drawn fresh capital into the state. Jefferies said large hurricane losses could refirm prices in some pockets. The firm does not expect a broad hardening. Carriers have enough capital buffers to absorb moderate losses without forcing a market-wide repricing.