The global reinsurance market has entered 2026 with some uncertainty, with record capital inflows triggering significant price weakness and Evercore ISI analysts warning that growth prospects will be “bleak” in the year ahead.
The industry is grappling with supply and demand imbalances, causing real estate catastrophic pricing to fall 20% during the January 1 renewal period, according to the “Reinsurance Returns Take Focus As Competition Intensifies” report.
After several years of a “tough” market, insurance buyers are now back in control, a shift driven by a surge in capacity due to overall reinsurance capital growth of 9% in 2025.
The report noted that increased capital has put greater pressure on real estate pricing. While Guy Carpenter reported a 12% fall in online rates, other major reinsurance brokers such as Howden Re and Gallagher Re also saw larger falls in rates of between 10% and 20% for accounts not affected by the losses.
“With prices down so much, real estate catastrophe pricing is around levels last seen in 2022. ILS issuance hit an all-time high in ’20 and outstanding catastrophe bond limits rose 23% to $58.2, according to Guy Carpenter, suggesting we see increased interest in reinsurance towers,” the analysts said.
Emphasis: “As such, while largely in line with expectations, the outlook for reinsurance growth is unclear. With pricing falling by -10-20% on January 1, 2026, and the potential for capacity expansion ahead of mid-year renewals, the market will continue to become more competitive and pricing will fall further below 2022 levels.
“While we believe some brokers are doing a better job at risk-adjusted pricing index levels to account for lower retention rates and looser terms and conditions, this is something we are watching closely as reinsurers have been able to sustain ROEs above 15% as insurers retain more losses.”
The softening of terms could negatively impact returns in 2026. For example, by getting more frequency coverage on 1/1 renewals, reports show Travelers (TRV) managed to reduce its retention rate by 25% to $3 billion.
Combined with forecasts that pricing will fall by 10-20%, the loose terms have led Evercore analysts to forecast lower-than-consensus earnings per share for the reinsurer. They also expect attrition rates to be worse due to lower pricing and a smaller shift in the business mix toward real estate.
The analysts went on to discuss the casualty reinsurance market at renewal: “While there remain casualty reserve issues (primary and reinsurance), the casualty reinsurance market appears to be stable on January 1, 2026.
“We were surprised to find that January 1, 2026 renewals were in some cases more buyer-friendly, as reinsurers were forced to increase ceding commissions (although it is unclear how much this occurred), while new ILS capacity may gradually create more ceding bargaining power. We also believe that reinsurers allocating capital from a more competitive real estate market will also help improve casualty insurance underwriting capacity.”
Evercore notes that if this dynamic gains real traction, the casualty reinsurance growth opportunities presented by Arch Capital Group could get worse.
Meanwhile, RenaissanceRe, Everest and WR Berkley Corporation have all said they are not interested in writing casualty reinsurance at current rates.
“We wonder whether casualty trading for property placement purposes will become a larger dynamic for reinsurers in the coming years, but the reserve position of major insurers remains unclear, leading to greater uncertainty for reinsurers about these portfolios,” the analysts said.
The conclusion: “We suspect this will lead to worse growth (we lower our estimates to reflect this dynamic), which will be offset by reinsurers gradually ramping up share buyback activity in 2026. We have raised our buyback expectations and are above the reinsurer consensus, but EPS remains below consensus given worse loss ratios.”
