Lara Mowery, chief commercial officer of reinsurance broker Gallagher Re, told Reinsurance News that while profitability may slow, she believes 2026 will be a healthy environment for reinsurance underwriting.
We spoke to Mowery regarding the release of the broker’s January 2026 reinsurance renewal report. She explained that the dynamics that set the stage for 1.1 renewals will continue to impact reinsurers’ ability to respond in 2026.
“What we see really driving activity on January 1 is centered around the amount of capital available and the fact that reinsurers and ILS investors are getting attractive returns. So when capital grows, a question arises, what do you do with that capital? Do you redeploy it? Do you do other things? There’s really no lack of incentive to redeploy that capital into the reinsurance industry because profitability is good and your natural inclination is to want more business,” she said.
Mowery noted that the additional capital exists due to the industry’s profitability and the fact that 2025 is a fairly modest year from a loss-forgoing perspective.
She said several factors have contributed to the industry’s current position, pointing to 2023 as a key reference point: “If we think about the past few years, using 2023 as the measuring point for property, from January 1, 2023, the reinsurance market has undergone significant market adjustments to drive the future profitability and attractiveness of the industry. These changes are also the catalyst for the insurance market to need to adapt its own approach to underwriting and capital management.”
“So you’ve seen that price action started to respond to significant losses before that, really starting in 2017 if we’re talking about property, and driven by activity in the mid-teens if we’re talking about casualties. There’s a need for remediation across the market in terms of underlying pricing, product add-on points and structure, and reinsurance pricing, add-on points and product structure.
“Reinsurers can change their portfolios very quickly. So in 2023, on the property side, when they make these big changes, it’s going to take longer for the insurance companies to filter the changes through their own portfolios. But now that’s actually happening, we’re seeing the results of the reinsurance movement and the insurance movement play entirely through the system. The interest rate increases that started a few years ago, the structural changes, are now affecting the dynamics of the insurance industry as well.”
Mowery added that reinsurers have benefited from this shift. Looking ahead to 2025 results, she said reinsurers had a very attractive year, in part because major losses were down about 10% compared with the 10-year average. She also noted that insured losses have started to correct, meaning the insurance industry’s profitability is improving.
She continued, “The insurance industry has adjusted based on the way property and casualty losses have occurred, and those adjustments are now really driving discussions with reinsurers. At the same time, reinsurers have also made their own adjustments, which has created a more attractive environment for them to deploy capacity. Capital has continued to grow during this period, primarily because of retained earnings, but also because of some additional interest in investment in the industry.
“We expect traditional capital to be up about 8% year over year through January 1. ILS capital, or alternative capital, we expect to be up about 12% year over year, which is really a testament to the fact that the earnings results and the continued interest in participating in the industry are there.”
Mowery noted that absent major unforeseen loss events, reinsurers may meet capital cost requirements again in 2026. If you assume a typical loss year, the key question is whether the reinsurer’s pricing and product structure still provide acceptable profitability. In her mind, they were.
Although property pricing fell more than expected ahead of renewals on January 1, 2026, she said: “People still expect our current pricing levels to deliver reasonable results for reinsurers in 2026, but as market dynamics evolve, reinsurers will not be able to achieve such costs of capital.”
