Global reinsurer RenaissanceRe (RenRe) expects property catastrophe rate declines to decelerate at the January 1 renewals, and also anticipates the market will remain disciplined with respect to terms and conditions and structures, noting that the supply of capital willing to accept risk is much more disciplined than it was a decade ago.
This was the message from David Marra, Executive Vice President and Global Chief Underwriting Officer (CUO) for RenRe, during the company’s recent third quarter 2026 earnings call with analysts.
In his prepared remarks, Marra said that ahead of the key January 1 renewals, RenRe expects the property market to remain competitive but attractive, with healthy demand likely to be outstripped by supply. While this will undoubtedly put pressure on pricing, Marra said that the expectation is that property cat rates will be down less than the firm’s year-to-date cat book rate reduction of mid-teens.
“Much of that supply comes from traditional reinsurers, and we expect the market to remain disciplined, including with respect to terms and conditions, coverages, and deal structures. We also expect the market will remain healthy, with retentions that appropriately share risk between insurers and reinsurers, and legal reforms, notably in Florida, continuing to reduce litigation and support favorable claims trends.
“Risk selection is more important in a transitioning market, but this is where our focus on being the best underwriter sets us apart. We have been here before. We know how to manage the cycle, and we have the right tools to shape both our gross and net portfolios. We anticipate our property business will remain rate adequate with returns exceeding our cost of capital, and opportunities to grow selectively,” said Marra.
In the Q&A, Marra was questioned further on the level of rate decline expected in the property cat space in 2027, prompting him to reiterate that RenRe foresees less pricing pressure than in 2026.
“A couple of extra perspectives on that, that might be helpful. Think about where the supply of competition is coming from. It’s mostly from cat bonds, and then also from traditional reinsurers. So, cat bonds put pressure on the top end of programs, and we expect pressure there, it could be more than what we saw this year. But the bottom to middle is mostly competed with the traditional reinsurers, and that’s where our sweet spot is in the net retained portfolio.
“Traditional reinsurers also are the most influential at agreeing on what retentions to set and what terms and conditions to write the business on, the structures that have made the book less volatile. So, if we contrast that with the previous cycle, there was more competition from less experienced managers, and we just think that the supply will be more disciplined,” he said.
Expanding on this point later in the call, Marra noted the property market reset in 2023, when terms and conditions became very attractive for reinsurers.
“And as capital has come in, it’s really been behind traditional reinsurers or retained earnings of traditional reinsurers. So, the supply of capital willing to accept risk has been much more disciplined than what we might have seen 10 years ago, where flexibility of structures was more of the key,” explained Marra.
“We’re confident that the types of structures that we’re selling now work for our clients. There are some structures like aggregate structures, which we’ve always been writing, but to a lesser extent and at a more catastrophic level than was written 10 years ago. There could be some evolution of those, but compared to what we saw 10 years ago, we’re really confident that the ability to assume risk at the capital level versus the earnings level, which is really the core of what we’re talking about, will remain intact going forward,” he added.
In terms of demand, Marra pointed to 2024, the first year after the reset, when there was a lot of growth in demand and brokers prioritised execution over any rate savings. The following year, he explained, the costly California wildfires “put some ballast into the market and delayed some of the softening.” Then, in 2026, there was pent up pressure for clients to achieve discounts after a few profitable years for reinsurers, said Marra.
“So, we think 2027 will be a more normalized year with a more normal supply-demand pressure,” he said, later adding that demand growth is now more in the single digits following $10 billion of additional limit purchased last year, $15 billion in 2024, and $20 billion the year before that.
“We do expect more demand growth. That’s part of a long-term trend where companies are using reinsurance to manage their own exposures, some of which are subject to inflation and total insured values going up… So, positive demand growth, but not as much as what we’ve seen in previous years,” said Marra.
Given RenRe’s confidence that its property cat book will remain rate adequate with returns exceeding its cost of capital, one analyst asked executives how much further cat rates can decline before this is no longer the case.
In response, Kevin O’Donnell, President and Chief Executive Officer (CEO) of Bermuda-based RenRe, said: “I’ve been at RenRe for 30 years. I’ve seen lots of different markets, and I’ve never seen a market that a company like ours, with the flexibility we have with different sources of capital, different ways to structure portfolios, where the cat market was not attractive to us. So, I look at ‘26 into ’27, ‘28 and beyond, I don’t see a scenario where RenRe is not in a position to write a large and profitable cat portfolio.”
