In a notable reversal of recent market trends, the January 1, 2026, reinsurance renewal cycle saw difficult casualty placements being traded for property positions – the exact opposite of the trade seen just three years ago, according to a recent Guy Carpenter report.
The casualty reinsurance renewals had nuanced outcomes based on region, structure, historical results and the scale of the outwards portfolio renewing at January 1, with reinsurers prioritising portfolio diversification and long-term relationships, rewarding cedents for structural discipline and historical performance, notes the broker.
According to Guy Carpenter’s ‘January 1, 2026 Reinsurance Renewal Report’, clients continue to remain disciplined with respect to limit management, terms and conditions being offered to their original customers, and maintaining appropriate attachment points.
“While pricing varies from positive (US exposed liability) to negative (E&O/PI, non-US exposed liability) and everywhere in between (US D&O), the structural changes that clients have implemented within their portfolios are giving greater confidence for re/insurers in the face of continued increases in US litigation costs,” analysts noted.
As a result of this discipline, reinsurer loss trends remained relatively stable year-over-year, as shorter limit deployment is proving very effective at managing loss severity trends.
The report highlighted that loss experience and structure were the two keys to renewal outcomes.
“Reinsurers are much more comfortable offering support on a pro-rata basis, as they have greater confidence in overall portfolio performance. As a result, if experience and portfolio composition are in line with expectations, pro-rata placements renewed per expiring,” the report stated.
Continuing: “Slight improvements occurred if there was a clear case of outperformance, but new capacity was needed as incumbent capacity generally reduced. Corrections were made on a case-by-case basis if results were materially worse than expected, with cross-line of business and placement trades readily occurring.”
Regarding excess of loss placements, the report noted that they had varied outcomes around the world. Attachment point was a key factor for this outcome, particularly where historical experience has been challenging and inadequate credit provided to the go-forward strategy.
“Lower attaching programs (particularly those in the US) felt more pricing pressure, due to the impact of litigation funding and claim severity. We saw rate increases of approximately 10% on these programs,” analysts explained.
Adding: “Higher-attaching treaties had less rate pressure, as the higher attachment points and reduced limit profiles had the combined beneficial impact of less experience and, more importantly, less exposure in the layer holding pricing flat to even some modest rate reductions in exceptional circumstances.”
The report also identified a softening trend in the Asia Pacific, Middle East, and Africa markets. Increased competition and capacity from European and Bermudian carriers seeking geographic diversification have led to more favourable terms for cedents in these regions.
While renewals in the US and international markets trended slightly ahead of the 2025 cycle, the Asia Pacific region moved more slowly as participants navigated these softening conditions.
Moreover, the traditional casualty market continues to adapt to the rise of alternative risk transfer (ART), as clients weighing alternative options such as sidecars against the benefits of traditional structures.
“In some cases, this reduces the amount of the placement in the traditional market, which, when coupled with substantive capacity, allows for a lower market clearing price for the reinsurance program,” analysts said.
Concluding: “Guy Carpenter’s analysis demonstrates improved health of the US casualty market, with cumulative rates exceeding trend by 64 points, based on developed losses from 2019 onward.
“In addition to significant rate improvement, US carriers have been disciplined with limit deployment, reducing average capacity between -40% to -60%.”
