While discussions around pricing and rate adequacy are important, Tom Wakefield, Global Chief Executive Officer (CEO) of Gallagher Re, has said that in the reinsurance broker’s view, the most important conversations as the market heads to Monte Carlo are around the increased volume of capital and choice now available to buyers.
Speaking this afternoon during Gallagher Re’s pre-RVS briefing, Wakefield and other leaders at the firm discussed a range of industry topics, with the greater choice of solutions and structures available to buyers ahead of the January 2027 renewals a key theme.
“As we look ahead to Monte Carlo, there will be a lot of discussion around pricing, where rates go next, whether the market has reached a floor, pricing adequacy, technical rating, and whether reinsurers will succeed in drawing a line in the sand after two years of softening,” said Wakefield. “These are important conversations, but in our view, they’re not the most important conversation. The defining feature of today’s market is not rate reduction. Instead, it’s the sheer amount of capital and choice now available to buyers, and the growing gap between those who are fully taking advantage of it and those who are not.”
Gallagher Re’s 2026 HY Reinsurance Market Report reveals that its composite, which tracks the performance of leading global reinsurers, reported a 19.9% return on equity for the first six months of 2026. So, reinsurers will arrive in Monte Carlo in excellent health, with strong balance sheets, still attractive profitability, and expected returns which continue to sit comfortably above the cost of capital.
“This is a market softening from strength, not from weakness. As a result, we expect many reinsurers to arrive with a familiar message: rates have fallen far enough, technical adequacy is returning, and the pace of softening should now slow. Our view is that far enough is a negotiating position, not a fact,” said Wakefield.
He went on to emphasise that in today’s competitive reinsurance market, capital continues to build faster than demand, and that across both traditional reinsurance and alternative capital, the industry challenge is no longer capital formation but rather capital deployment.
“The amount of capital seeking opportunities to support growth, improve return, and put money to work continues to increase, while demand growth remains comparatively modest. That dynamic is creating one of the most buyer-friendly environments that we’ve seen for decades,” he continued.
However, Gallagher Re’s analysis finds that not all buyers are making equal use of this buyer friendly landscape, with Wakefield highlighting the emergence of an optionality gap, suggesting cedents have more options than they may realise.
“The best performing cedents are no longer approaching renewals solely as a procurement exercise, they’re using today’s market conditions to rethink programme structures, reassess retentions and limits, diversify sources of capital, improve earnings resilience, and build more durable risk financing frameworks,” he said.
As a result, Gallagher Re believes that the most successful outcomes this upcoming renewal season are unlikely to come from achieving the largest headline rate decrease, and will instead come from “using today’s market to improve capital efficiency, reduce volatility, strengthen balance sheets, and secure structural advantages that continue to create value long after the market eventually normalises.”
“The real opportunity is to use the environment to build better programmes. In practical terms, that means helping clients capture the benefit of today’s pricing and capacity conditions, while challenging long-held assumptions around programme design. It means using analytics and financial evidence to identify new ways to improve capital efficiency and earnings resilience. And it means helping clients secure structural advantages today that will continue to benefit them when the market conditions inevitably become more challenging again,” said Wakefield.
Adding: “Ultimately, our role as a global reinsurance broker is to connect risk with capital, and that capital is broader, deeper, and more diverse than it has ever been. The choices available to clients are expanding rapidly.
“Increasingly, the question is not whether capital is available, but which source of capital is best suited to solving a particular problem? What is its fungibility, duration, and ultimately its cost? And the firms that emerge as strongest from this cycle are likely to be those that recognise that shift earliest and act on it most effectively.”
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