Moody’s flagged concerns about the P&C reinsurance outlook for 2027 if recent trends of rate declines and incremental softening in terms and conditions continue into that year, TD Cowen reported following a recent call with the rating agency.
On 16th January 2026, TD Cowen hosted a call on the 2026 outlook with Sarah Hibler, Moody’s North America P&C insurance Associate Managing Director, alongside members of her team, including Bruce Ballentine, Jasper Cooper, Evelyn Ocas Salazar, and Laline Carvalho-Neff.
During the call, Moody’s highlighted the acceleration of pricing declines in property catastrophe reinsurance at the January 1st 2026 renewals, with risk-adjusted rates down 10-20%.
For example, global re/insurance broking group Howden said in its renewal report that risk-adjusted global property catastrophe reinsurance rates-on-line fell by an average of 14.7%, accelerating from an 8% decline in 2025 and marking the largest year-on-year reduction since 2014.
Moody’s added that there has been a growing supply demand imbalance, with industry capital up notably due to higher retained earnings and growth in alternative capital, which Gallagher Re estimated rose 12% in 2025 and now accounts for roughly 15% of total industry capital.
The rating agency also noted increased appetite among reinsurers to offer aggregate covers, which have historically been a source of significant losses, but less so after the property market reset in 2023 which saw sellers lift attachments.
Looking ahead, TD Cowen said Moody’s expects recent trends of rate declines and softening in terms and conditions to persist in 2026. Despite this pressure, Moody’s still expects solid reinsurance profitability in 2026, but expressed greater concern about the outlook for 2027 should these trends continue.
“In casualty and specialty, Moody’s described casualty reinsurance pricing as flattish into 2026, with some incremental pressure in certain lines and accounts. Similarly, Moody’s cited rate declines in certain specialty reinsurance lines. This has coincided with a seemingly increased appetite from alternative capital providers to underwrite longer-tail lines, as Moody’s noted interest from certain insurance-linked security providers in cyber and certain other casualty lines,” said TD Cowen.
Moody’s also noted that catastrophe modellers have increasingly focused on wildfires and severe convective storms in recent years, as these secondary perils are driving a greater share of overall catastrophe losses and are less mature and tested than hurricane and earthquake models.
In response, underwriters have placed renewed focus on understanding and reducing their concentrations across portfolios.
There has also been increased focus on certain terms and conditions, such as covering roofs at depreciated value, rather than replacement value, as well as on the use of more resilient building materials. In addition to insurers, state legislators (e.g., CA) have moved to incentivise more defensive building materials and codes, which could ultimately benefit insurers.
