Gallagher Re releases its latest 1st View report, showing the January 1 2026 renewal was characterised by choice, change and opportunity for cedants as increased reinsurance capacity drove significant rate reductions across most lines of business. Risk-adjusted property catastrophe pricing decreased 10% to 20% on average, driven by material movement in all geographies. Many US casualty cedants were able to hold reinsurance pricing risk-adjusted flat, while loss-free speciality programmes achieved significant exposure-adjusted pricing reductions. Reinsurance capital is expected to reach record highs at year-end 2025, with about 8% growth in traditional capital to US$710 billion and alternative capital growth of approximately 12% to US$128 billion, for a total of US$838 billion. Sector profitability is expected to remain sustained, with a headline return on equity of approximately 17% to 18% for 2025, at least in line with 2024 levels and potentially the second-best ROE in the past decade. Reinsurers' profitability and increased capital was helped by a relatively light year for large insured cat losses. These were approximately 10% less than the 10-year average and more concentrated in non-peak perils. However, 2025 was the sixth consecutive year that experienced insured losses over US$120 billion. The influence of Insurance Linked Securities on reinsurance market dynamics continued to grow in 2025. Total issuance of ILS passed the US$20 billion mark for the year, and in long-tail lines alternative capital activity has roughly doubled over the last 12 months. In the global property market, buyers were met with a more accommodative market than seen in the last several renewals. While many buyers focused on "down pricing" rather than "up risking", there were exceptions, with some cedants achieving a rational trade-off between price and enhanced coverage. In casualty, concerns over the US litigation environment, prior year loss development and elevated loss trends remained key topics. Loss activity in recent accident years and the likely impact on ultimate performance was the single biggest topic for insurers and reinsurers alike. Competition among reinsurers for international casualty business was healthy, and appetite continued to expand as reinsurers looked for growth and diversification opportunities. The result was ceding commission up and rates down 5% to 10%. The speciality market continued to be defined by an oversupply of capital and significantly increased appetite for all speciality lines. Tom Wakefield, global CEO for Gallagher Re, says: "The 1.1.26 renewal represented further price reduction and structural flexibility. Technical pricing, geography, loss history and line of business all influenced how much programmes changed."
