Cedents Find Competitive Market Conditions at Midyear Reinsurance Renewals: Brokers

Record levels of reinsurance capital and strong reinsurer profits are driving increasing reinsurer risk appetites and softening prices during the midyear renewals, according to reinsurance brokers in their respective market reports.

“In the traditional property market, abundant reinsurer capacity continues to drive a progressively competitive pricing environment,” said Guy Carpenter, the reinsurance brokerage business of Marsh. “Risk-adjusted decreases have deepened since January 1, 2026, with the global property catastrophe rate-on-line index down -16%.”

While specialty reinsurance renewals continued a similar softening trend, Carpenter said, significant loss development from the 2024 Francis Scott Key Bridge collapse in Baltimore is expected to hit 2027 marine renewals.

“In April 2026, the total loss reserve for the bridge collapse increased from US$1.5 billion to US$2.8 billion,” said Guy Carpenter in its report titled “July 2026 – Reinsurance Renewal Report.” (Editor’s note: the full renewal report is available on the broker’s Renewal Resource Center.)

The Carpenter report noted that most of the claims from the Baltimore bridge collapse will be borne by the reinsurance and retrocession markets. “As the latest reserve increase occurred after 90% of impacted programs were placed in 2026, pricing implications will not be seen until the 2027 renewal season.”

“In the current market conditions, cedents have secured competitive pricing and terms on their reinsurance programs, but many are also exploring alternative options, such as parametric solutions and sidecars, as ways to complement their traditional protection,” said Dean Klisura, president & CEO, Guy Carpenter, in a statement accompanying the report. “We expect this trend to continue as we move through the remainder of the year.”

“Property catastrophe reinsurance renewals at June 1 and July 1 were productive for insurers, with double-digit pricing reductions and improving terms for most placements,” said Aon in its report titled “Reinsurance Market Dynamics Midyear 2026 Renewal Report.”

“In this market, buyers have been able to achieve outcomes better tailored to their needs across most lines,” said the Gallagher Re’s First View report titled “A Moment for Creativity – July 2026.”

“The market has been trending in this direction throughout 2026, so these themes are not new. What distinguished the July 1 renewal is the speed at which these conditions advanced,” said Gallagher.

“Reinsurer appetite continued to increase and broaden, with Florida experiencing one of the most positive renewals in a decade. Insurers in Latin America and Australia/New Zealand also benefited from fewer constraints and ample capacity for placements,” Aon confirmed.

What’s Happening With Reinsurance Demand?

“Global reinsurance demand for midyear renewals rose by more than 10%, driven by an expanded product offering from reinsurers and a greater desire to buy more coverage at the top of programs in the U.S.,” Aon said, noting that reinsurance capacity overall was plentiful and adequately met this additional demand in the U.S.

Gallagher Re’s estimated, however, that reinsurance demand, overall, barely moved last year.

“That widening gap between supply and demand has become the defining feature of the market: one we identified at January and April, and which intensified through the midyear renewals rather than eased,” Gallagher Re said. “As long as this imbalance continues, capital management will be a prominent question for reinsurers — who remain keen to write business if the economics are acceptable, but will look to other options if not.”

Reinsurance Capital at Record Levels

“Global reinsurer capital rose by $5 billion to a new high of $790 billion at March 31, 2026, mainly driven by the continued growth in third-party capital,” Aon added.

Guy Carpenter and Gallagher Re also cited record levels of reinsurance capital but with slightly different numbers. Carpenter’s estimate for dedicated reinsurance capital was US$663 billion in 2025 — an increase of 9%, with alternative capital increasing by 15% since 2024. Gallagher Re estimated that dedicated reinsurance capital reached a record US$648 billion at the end of 2025, up 11% on the year, driven by retained earnings.

Gallagher Re noted that while retained earnings have been the most prominent contributor to the record level of capital, the impact of alternative capital growth has been significant. “Non-life alternative capital grew 18% last year to a record US$135 billion, and the inflows are no longer confined to natural [catastrophes].”

Strong Reinsurer Profits

Gallagher Re pointed to the fact that reinsurers have reported excellent results which is driving record capital levels and leading to competitive (softening) rates.

Reinsurers are entering “the second half of 2026 in exceptional health,” with a 2025 return on equity near 19% and very light catastrophe losses during the first half of this year (compared to the latest 10-year average), said Gallagher Re, explaining that this profit picture has left the sector with “the motivation to deploy.”

“Returns are expected to moderate in 2026 but to remain comfortably above the cost of equity, leaving a sizeable earnings buffer to absorb the impact of falling rates,” Gallagher said. “So long as forecast forward returns remain attractive, there is plenty to drive competition as we head toward the 2027 renewals.”

Aon also referred to reinsurers’ healthy balance sheets. “Reinsurers’ underwriting results have remained strong, with reinsurers reporting an average Q1 return on equity of 14.1%, well above the average cost of equity,” Aon said. “With a strong El Niño weather pattern expected to suppress Atlantic hurricane activity in 2026, most reinsurers are well placed to comfortably exceed their cost of capital in 2026.”

“Reinsurers’ underlying returns, though narrowing, remain strong by historical standards and comfortably ahead of their cost of equity,” said Gallagher Re’s report.

“Pricing is converging towards technical adequacy rather than overshooting it,” Gallagher added. “Discipline remains visible, and reinsurers have continued to reward cedants who hold the line on deductibles and structural integrity. We are mid-cycle, not at the bottom — which is precisely why cedants’ actions now could matter for years to come, and why reinsurers continue to seek access to attractive partnerships at acceptable terms.”

Other findings from the report include:

• In property lines, Carpenter said, attractive terms and coverage options are spurring exploration of supplemental solutions to augment traditional catastrophe programs.
• Third-party capital is increasingly being put behind casualty risks and a broader range of lines – activity that has remained elevated in 2026, said Gallagher Re.
• Midyear casualty renewals demonstrated “nuanced outcomes, reflecting adequate capacity, differentiated pricing based on loss experience, and evolving market structures as clients increasingly sought to leverage structured risk solutions,” Carpenter noted.
• Gallagher Re explained that casualty reinsurance outcomes during the July 1 renewal period reflected a market that is cautious about cedents’ underlying performance, yet increasingly flexible in execution. “Reinsurers have been more willing to balance their casualty concerns with their interest in supporting core clients, particularly within broader, multi-line relationships.”