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Reinsurers on the eve of the 2026 renewals
On the eve of the 2026 renewals, the reinsurance market is no longer subject to simple corrections as in the past. Instead, it is undergoing an unprecedented transformation dynamic.
The emergence of new risks and recurring pressure on capacity and premiums have ultimately resulted in profound changes in the reinsurance business model.
Now, capacity, whether traditional or alternative, is no longer an issue, and the upward revision of rates has enabled reinsurers to turn the market around thanks to an underwriting policy in line with the guarantees granted.
As a result, the “hard market” imposed on insurers after the Covid years has led to a strengthening of reinsurers' capital which has peaked at 1,177 billion USD at the end of 2024, nearly double its 2015 level. At the same time, the industry's global technical result rose from 36.2 billion USD in 2015 to 85.7 billion USD in 2024, the highest amount ever recorded in the market.
ROE, the latest indicator of the market's spectacular recovery, measuring the sector's profitability, reached its highest levels in ten years in 2023 and 2024, at 7.2% in 2023 and 7.3% in 2024, compared to 1.3% in 2022.
Reinsurers are therefore approaching 2026 in a fairly favorable position. The only cloud on an otherwise clear horizon is the natural disaster claims experience in the first half of 2025, particularly the California wildfires at the beginning of the year, standing as a reminder to all market players to remain cautious.
For 2026, climate change, which is driving profound market transformation, remains under close scrutiny. Along with cyber risks and geopolitical conflicts, it is one of the major events likely to cause large-scale disasters.
In conclusion, the much dreaded “major” disaster is prompting reinsurers to exercise great caution, thus maintaining a certain amount of pressure on the market while remaining “selective”. They will withdraw from unprofitable businesses and turn to insurers with solid balance sheets and excellent risk accumulation management.
