Risk-adjusted property reinsurance rates are trending down in 2026, and while the magnitude is uncertain, early indicators from the catastrophe bond market suggest a significant shift, Slide Insurance CEO and Founder, Bruce Lucas, noted during the company’s latest earnings call.
Slide recently placed a $320 million ILS (insurance-linked securities) bond, which saw risk-adjusted pricing down more than 20% year-over-year, according to Lucas.
While pricing for this cat bond is a strong indicator, the executive remained cautious regarding what it means for rate movements for traditional reinsurance.
He stated: “I don’t know if that’s going to be where the traditional reinsurers come in, so I’ll just avoid any guidance on that point.
“Suffice to say, our guidance does have a reduction in reinsurance expenses embedded within it, but we don’t know the extent of what that reduction will look like until we get a little further along prior to our 6/1 renewal.”
He highlighted: “Risk-adjusted rates, I believe, will come down in 2026. I just can’t comment on what the magnitude of that is going to be. I do think risk-adjusted rates are lower, and our cat bond really reflects that. You also pick up overall diversification benefit on your reinsurance tower as you spread your footprint across a wider geography.”
Despite potential rate decreases, Lucas expressed confidence that insurance margins will remain stable.
“That’s the big needle mover, and we need a few more months to go through that renewal process to get a better understanding of what that looks like and its potential impact on rate. I do feel confident in stating a couple of things around reinsurance,” the executive stated.
He continued: “First, I believe that even with a reinsurance price decline, margins are going to be maintained. They go lockstep with one another. Bottom line numbers should be unaffected by a rate decrease.”
Lucas also highlighted Slide’s geographical diversification as a key component for the company’s strategy to offset market shifts.
The CEO said: “Second, there are tremendous reinsurance synergies to be gained by expanding our footprint outside of Florida and South Carolina. That is what we are really focused on more than anything else.
“We expect to launch California on excess-and-surplus lines in the next 30-60 days. We are on track to launch northeastern states, New York, New Jersey, later this year, and Rhode Island. There are a lot of other E&S pockets out there that we are going to launch later this year.
“So, we think that even with a decline, potentially, a small one in rates this year, we still believe we’re on an upward momentum trend for top-line growth, given the diversification, new state launches, and our underwriting, Slide has only accelerated over the last nine months within Florida. So, that’s a good trend to have at this point.”
Lucas also spoke about Slide’s potential for more Florida Citizens – a sate-backed entity established to act as the “insurer of last resort” – takeouts.
He said: “The main driver, as to whether or not those policies are a good fit, is going to be the reinsurance cost. We don’t know what the reinsurance market is going to do this year. It, by all indications, appears to be a down-pricing market, which is good for the consumer. That would open up a new tranche of policies that would look good to us.
“We do think that there are ongoing opportunities at Citizens. I cannot quantify what that is at this point in time, but, suffice to say, it is a smaller opportunity than what we have seen in prior years.”
