Robust ILS market performance facilitates the reopening of the retro market on January 1, says SI Re.

Signal Iduna Reinsurance Ltd. (SI Re), a Swiss-based reinsurer, reported that the reinsurance industry experienced a smooth renewal season in January. A key development during this period was the strong performance of the insurance-linked securities (ILS) market, which played a crucial role in reopening the retrocession market.

As part of its diversification strategy, SI Re selectively invests in ILS structures to gain exposure to global risk sources. During the January renewals, the reinsurer expanded its underwriting portfolio by 10% in premium volume, reaching EUR 225 million. This growth was driven by well-established business opportunities, strong client relationships, and an improved Fitch rating, which was upgraded to “A.” New business contributed approximately 20% of the total premium volume written during the renewals.

In comparison, SI Re’s underwriting portfolio grew by 2% in the previous year’s January renewals, with the reinsurer also re-underwriting 16% of its third-party property and casualty business.

SI Re’s CEO, Bertrand R. Wollner, highlighted the company’s continued success, attributing it to prudent underwriting, long-term partnerships, and disciplined risk management. He emphasized that the ongoing tightening of terms and conditions across the insurance value chain, which began in the retrocession market in 2022, has now extended to the primary markets, leading to higher rates.

Chief Underwriting Officer Robert Salzmann noted that SI Re’s Fitch upgrade to ‘A’ in August 2023 enhanced its access to new business and clients, further diversifying its portfolio. He also emphasized efforts to manage risk volatility by refining exposure controls. The reinsurer remains focused on European markets while leveraging its structured ILS portfolio for global diversification.

Salzmann, an ILS specialist, was promoted to Chief Underwriting Officer in December and joined SI Re’s Executive Board.

Looking at the broader market conditions, SI Re observed that despite ongoing macroeconomic and geopolitical challenges in 2024, inflation had eased, and capital markets performed well. Natural catastrophe losses remained high, totaling around USD 150 billion. However, insurers were able to keep pace with inflation while strengthening their portfolios with sustainable pricing and terms.

SI Re noted that improved market resilience and investor confidence, fueled by strong ILS performance, led to the reopening of the retrocession market. This recovery in risk capacity resulted in moderate price adjustments during renewals, though under strict underwriting discipline.

During the 1/1 renewals, SI Re continued enhancing profitability while reducing volatility. The company scaled back quota share programs, shifting towards non-proportional reinsurance, maintaining stringent control over its portfolio. Property business volume declined by 6%, but this reduction was offset by new diversified business. The reinsurer also further limited its exposure to natural catastrophe risks by focusing on higher layers and allocating more capacity to long-tail lines.