Despite a softening in pricing, industry leaders suggest that structural improvements and “inherently good” price adequacy are set to maintain high margins, leading Autonomous to forecast strong reinsurance profitability for 2026.
The sector enters this period following an exceptionally strong 2025, where record levels of reinsurance capacity -driven by robust earnings and a relatively stable year for catastrophe losses – began to outpace demand.
“The narrative, however, has pressuring stock performance, which, as we highlighted earlier this week, appeared to be particularly acute among the European reinsurers, relative to the US/Bermudan sector, a gap that has widened over the course of this week,” Autonomous states.
Adding: “The news flow in aggregate over this week (admittedly more significant and price sensitive for the Bermuda space) has been, we think, supportive overall, particularly around renewals. Stock performance, though, remains highly dispersed.”
The abundance of capital has led to a reduction of pricing, particularly in the property catastrophe space. While the January 1 renewal period confirmed significant mid-teens reductions, the overall experience varies among listed reinsurers due to their diversification.
For example, SCOR and Hannover Re reported much smaller pricing decreases, around 2-3%, yet still achieved portfolio growth, demonstrating a divergence from the headline cat rate reductions.
Crucially, reinsurers remained disciplined around T&Cs, as noted by brokers; with SCOR, Hannover Re, RenaissanceRe, and Everest concurring that T&Cs, including attachment points, were broadly stable.
“Lowering of attachment points and appetite for aggregates appears the exception, albeit we will be continuing to tally exceptions through the primary reporting season in the US and Europe,” analysts noted.
According to Autonomous, “the outlook for profitability appears strong for 2026.” Everest noted programs are now “very favourable” for profit generation, with the current book crafted differently. RenRe similarly described its well-priced, structurally improved portfolio since 2023 as “still one of the best.”
Looking ahead to the mid-year renewals, the trend of softening is expected to continue. Everest suggests that industry cat rates may continue to see double-digit declines, though the US market is still viewed as having the highest level of price adequacy.
Analysts also note that recent reforms in states like Florida are also beginning to show beneficial effects, which may further influence pricing dynamics as 2026 approaches.
