The global reinsurance market has entered 2026 with some uncertainty, as a record breaking influx of capital has triggered a significant softening in prices, leaving analysts at Evercore ISI to warn of a “murky” growth picture for the year ahead.
According to the ‘Reinsurance Return Story in Focus as Competition Increases’ report, the sector is grappling with a supply-demand imbalance that has seen property catastrophe pricing tumble by as much as 20% during the January 1 renewals.
Insurance buyers are now back in control after several years of a “hard” market, a shift driven by a surge in capacity stemming from a 9% overall increase in reinsurance capital during 2025.
This increase in capital has put more pressure on property cat pricing, the report noted. While Guy Carpenter reported a 12% drop in rates-on-line, other major reinsurance brokers including Howden Re and Gallagher Re have tracked steeper declines of between 10% and 20% for accounts not impacted by losses.
“With pricing down this much, property cat pricing is around levels last seen in 2022. ILS issuance had a record year in ’25 with outstanding cat bond limit up 23% to $58.2b according to Guy Carpenter, showing increased interest that we think trickles down reinsurance towers,” said analysts.
Highlighting: “As a result, the growth picture is murky at the reinsurers although is largely embedded in expectations. With pricing down -10-20% at 1/1/26 and likely building capacity ahead of midyear renewals, the market will continue to get more competitive and pricing will fall further below the 2022 level.
“While we believe some brokers do a better job at risk-adjusting pricing index levels to account for lower retentions and looser T&Cs, this is something that we are paying close attention to as reinsurers have been able to sustain 15%+ ROEs as more losses have been retained by insurers.”
The softening of terms could negatively impact returns in 2026. For instance, more frequency covers were accessible at the 1/1 renewals, and reports indicate that Travelers (TRV) managed to reduce its retention by 25% to $3 billion.
Coupled with a forecast for pricing to be down 10-20%, this loosening of terms leads Evercore analysts to project lower than consensus EPS for reinsurers. They also anticipate worse attritional loss ratios as a result of the lower pricing and a less significant shift in business mix toward property.
Analysts went on to discuss the casualty reinsurance market at the renewals: “While there are still casualty reserve issues (both primary and reinsurance), the casualty Re market appears to have remained stable at 1/1/26.
“We were surprised to hear the 1/1/26 renewal was more buyer friendly in some cases as reinsurers were pressured to increase ceding commissions (although it isn’t clear how much this occurred) and new ILS capacity may have created incrementally more cedant bargaining power. We also believe reinsurers allocating capital away from a more competitive property market also served to increase casualty capacity.”
If this dynamic gained real traction, Evercore noted, the casualty reinsurance growth opportunity voiced by Arch Capital Group could become incrementally worse.
Meanwhile, RenaissanceRe, Everest and W.R. Berkley Corporation have all indicated they are not interested in writing casualty reinsurance at current rates.
“We wonder if trading casualty for property placements becomes a bigger dynamic at the reinsurers over the next few years, but the reserving picture is still cloudy at the primary insurers which results in even more uncertainty at reinsurers on those portfolios,” analysts stated.
Concluding: “We suspect this will lead to worse growth (we reduced our estimates to reflect this dynamic) that is offset by incrementally more share repurchase activity across the reinsurers in 2026. We increased our buyback expectations and are above consensus across the reinsurers, but still remain below consensus on EPS given worse loss ratios.”
