Conditions in the casualty reinsurance market were relatively favorable as of January 1, 2026, driven by increased capacity and strong overall reinsurance demand, according to the latest renewal report from global insurance and reinsurance brokerage group Aon.
Aon noted that increased capacity and strong demand from existing reinsurers and new market entrants will help increase competition in international casualty insurance and support the stability of the U.S. insurance business.
“Renewals also benefit indirectly from competition in the property catastrophe reinsurance and short-tail lines. As most reinsurers pursue aggressive premium growth targets, those maintaining a holistic all-client approach, including support for casualties, remain the most relevant,” Aon said.
The broker observed that demand for reinsurance was generally strong and retention levels remained stable.
“However, casualty insurers are increasingly recognizing the benefits of rate increases, underwriting and claims management actions taken over the past two years, reflected in improved performance and increased reserves, while relatively high interest rates continue to support attractive investment returns,” the company said.
Aon noted that many casualty insurers now have increased purchasing power at renewal time and are generally more confident when assessing the balance between net retained risk and ceded risk.
In the US, casualty reinsurance renewals were generally positive on January 1st. Aon explained that the increased capacity has helped maintain stable conditions, resulting in flat or slightly improved pricing for most placements. Capacity is sufficient as many reinsurers seek to expand their product lines and no major players seek to reduce risk exposure.
“While the impact of nuclear verdicts, abuse of the legal system and third-party litigation funding remain key concerns for the market, a strong underlying rating environment for U.S. casualties is helping to maintain the demand/supply balance,” Aon said.
Meanwhile, international casualty reinsurance has become increasingly competitive since 2019, supported by new and expanded capacity and favorable loss developments in non-U.S. claims.
Aon explains: “Market conditions remain divided: larger, complex businesses with greater exposure to U.S. risk have seen more pronounced improvements, while buyers with smaller or less complex portfolios have achieved more significant risk-adjusted rate reductions. Buyer-friendly conditions have enabled cedants to seek improved terms and conditions. In Argentina, recent modernization of workers’ compensation requirements will make the market more attractive to reinsurers and insurers.”
At the time of renewal in January, the financial insurance reinsurance market was generally in good order, more favorable than in previous years, and had sufficient capacity to complete placements.
“The main concern remains the significant decline in primary rates, particularly in public D&O. However, Aon’s latest quarterly D&O Pricing Index shows that US public D&O primary pricing fell by just 1% on average in the third quarter, suggesting stabilization after years of significant price reductions. Fee reductions in other areas have been less pronounced, particularly in the professional indemnity space where positive rates still exist,” Aon said.
“These underlying dynamics have helped shape reinsurer interest at renewal. International schemes are once again competitive, while treaties with high concentrations of US public D&O exposure or significant loss activity are being looked at more closely. In addition to these core considerations, reinsurers are also mindful of the changing risk landscape, including emerging artificial intelligence-related risks and broader economic and geopolitical uncertainty. Changes to original coverage are monitored, such as the rise in hybrid networks in financial institution risks and the relaxation of fire safety exclusions in UK professional indemnity portfolios.”
Aon also noted that trading debt capacity has contracted from previous highs. However, a significant reduction in contingent liability exposure, early signs of improving interest rates and expectations of increased deal flows support placement dynamics at renewal on January 1, although capacity remains selective and economically sensitive.
