Top re/insurance executives have told KBW that the pricing cycle looks steeper because sharp 2023 rate hikes left more room for cuts, while a long-term pattern of higher highs and higher lows reflects stronger risk awareness among buyers and sellers and suggests a few more years of easing rates, albeit with smaller declines than at January 1 2026.
Among the executives were Howden Re’s David Flandro, Aeolus Capital Management’s Aditya Dutt, and Aon Reinsurance Solutions’ Michael Van Slooten, who discussed the January 1 reinsurance renewals.
As we’ve extensively covered here at Reinsurance News, the 1/1/26 reinsurance renewals included the biggest declines in many years.
Howden’s reinsurance renewal report revealed that risk-adjusted global property-catastrophe reinsurance rates-on-line decreased by an average of 14.7%, accelerating from an 8% fall in 2025 and marking the largest year-on-year reduction since 2014.
However, despite substantial price declines, terms and conditions have remained largely stable, KBW said, with per-occurrence reinsurance attachment points unchanged in nominal terms, though inflation is gradually eroding real attachment levels.
“There was some moderation in terms and conditions; some renewals expanded coverage for terror, riots, and cyber losses, and ‘frequency’ coverage (i.e., protection against frequent smaller losses) is increasingly available, but not remotely at the levels available in past soft markets. Recent years’ non- concurrent terms and conditions (which we also see as a hard market phenomenon) also largely disappeared at 1/1/26,” KBW observed.
The executives also reportedly told KBW that expected returns remain adequate and that a collapse in terms and conditions is unlikely, particularly if the top seven or eight reinsurers, now equipped with far stronger data and analytics and facing less mid-cap competition than in the last cycle, maintain discipline.
“The positive takeaway is still-strong near-term returns; the more sceptical viewpoint is that these returns will similarly sustain compounding price competition. We believe that both of these are true (and we also agree that better analytics – including catastrophe modelling – should keep the industry from fully repeating its past self- inflicted damage), but in the near term, we expect investors to focus mostly on the latter, implying pressured multiples,” KBW added.
On reinsurance demand, the executives said cedents either retained the savings or bought more coverage, though limited overall demand growth suggests more of the former, reflecting, in KBW’s view, stronger primary earnings and lower cedent costs of capital, which can make reinsurance a less attractive alternative.
“Similarly, slowing top-line growth overall (with key exceptions) also points to sustained soft pricing, with the explicit (and correct, we think) caveat of the industry’s exposure to external events that range from data centre-related demand growth to geopolitical uncertainty to unforeseen (but inevitable) developments,” KBW said.
As noted, executives told KBW that the cycle’s relative steepness partly reflects the sharp rate increases of 2023, which created more room for declines, with one executive adding that the catastrophe reinsurance pricing cycle, dating back to Hurricane Andrew in 1992, has produced successively higher highs and higher lows, likely reflecting improving risk awareness among both buyers and sellers.
“We think this implies a few more years of declining catastrophe reinsurance rates, but with smaller decreases than those reported for January 2026,” KBW concluded.
