Aggregate property reinsurance, or “agg,” is making a return to the market after a period of limited availability, according to Gallagher Re.
The product, which nearly disappeared after 2020, is now being offered again by reinsurers, but with higher attachment points and a focus on protecting against less common catastrophe loss accumulations rather than frequent, smaller losses.
During the soft market of the late 2010s, aggregate coverage sometimes operated as a working layer, with insurers regularly recovering under their protection. This structure helped manage losses from events such as severe convective storms and wildfires, but the modeling for these perils was less developed than for windstorm or earthquake risks.
As a result, reinsurers found it difficult to anticipate the scale of losses under aggregate treaties. Despite this, the market continued to offer whole-account aggregate coverage until persistent losses made low-attachment structures unsustainable. Many insurers dropped aggregate cover and shifted to all-perils occurrence treaties, leading to increased retentions.
Gallagher Re notes that demand for aggregate protection never fully disappeared. In Europe, many insurers continued to purchase aggregate coverage, sometimes as their only reinsurance against natural catastrophes. When the market contracted, some insurers raised retentions or sought alternative solutions.
Gallagher Re assisted clients in negotiating customized, multi-year arrangements to help finance retained losses. In the United States, aggregate reinsurance was widely used to fill gaps left by conventional occurrence excess-of-loss protection, but after 2020, it was typically limited to peak perils such as hurricanes and earthquakes.
The reinsurance landscape is also being shaped by the growing use of other once-niche structures. US life insurers have transferred more than US$1 trillion in liabilities to offshore reinsurers, with Bermuda and the Cayman Islands emerging as leading jurisdictions. This trend continues despite increased regulatory scrutiny 547851and concerns about the adequacy of asset backing and broader financial stability.
Offshore reinsurance capital in Bermuda now represents about 35% of the world’s reinsurance capacity, underscoring the significance of these jurisdictions in the global market.
Regulatory scrutiny is increasing for funded or asset-intensive reinsurance, especially as pension de-risking transactions grow and more liabilities are transferred to offshore reinsurers. Both US and European regulators are reviewing whether their frameworks are sufficient to address the evolving risks associated with these innovative structures.
The European Insurance and Occupational Pensions Authority and the US National Association of Insurance Commissioners are among the bodies considering new guidelines and asset adequacy testing for these arrangements.
The use of sidecars among US life and annuity insurers has also increased, with the number of companies utilizing these structures tripling since 2021. Ceded reserves to sidecars have grown threefold over two years, as insurers seek alternative capital management tools to support rising premium volumes and manage risk.
Insurers have responded to losses from secondary perils by accelerating global re-underwriting efforts, supported by advances in risk analytics and changing market dynamics. Gallagher Re reports that these efforts have led to a better match between the supply and rating of primary insurance and the new loss environment. Reinsurers have improved cost-sharing through increased deductibles and other mechanisms to align premiums with risk or reduce exposure.
Aggregate cover has returned in a more sustainable form. In Europe, insurers from German-speaking countries and Italy have been active buyers, while in the US, carriers from single-state mutuals to national writers are exploring or purchasing all-risk aggregate protection.
Gallagher Re’s property specialists observe that aggregate coverage is becoming more available for US cedants, provided programs are structured appropriately, attachment points are practical, and insurers offer robust, data-backed rationales for coverage.
The appetite for each-and-every-loss reinsurance remains strong, and falling property reinsurance prices have made the product more attractive. Gallagher Re estimates that reinsurance capital could increase by about US$57 billion in 2025, leaving reinsurers with additional capacity and flexibility.
With this surplus, reinsurers are selling aggregate again, recognizing the value of well-structured treaties for both themselves and their clients.
Gallagher Re expects that well-structured aggregate protections could be reinstated for the upcoming renewal season, with new purchasers recognizing their value. However, the return is cautious. Attachment points remain elevated, and clearer modeling of expected loss potential is required to support purchases.
Preferences and economics vary by insurer and relationship, but the general trend favors protections where insurers retain a greater share of losses. Aggregate protection is unlikely to be economical for frequencies lower than five years in the US or for 20- to 25-year losses in Europe.
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