Despite soft pricing, industry leaders said structural improvements and “substantially sound” price adequacy will maintain high margins, leading Autonomous to forecast strong reinsurance profitability in 2026.
The industry enters this period after an unusually strong 2025, with record reinsurance capacity levels beginning to exceed demand, driven by strong earnings and relatively stable catastrophe losses.
“However, this narrative has put pressure on stock performance and as we highlighted earlier this week, European reinsurance stock performance appears to be particularly severe relative to the US/Bermuda industry, a gap that has widened this week,” Autonomous said.
Adding: “We believe the overall news flow this week (which is admittedly more important and price-sensitive to the Bermuda space) has been generally favorable, particularly on the renewal front. However, stock performance remains highly dispersed.”
Abundant capital has led to lower pricing, especially in the real estate disaster space. While significant mid-teens reductions were confirmed during the January 1 renewal period, the overall experience among listed reinsurers varied due to their diversity.
For example, SCOR and Hannover Re reported much smaller pricing reductions of approximately 2-3% but still achieved portfolio growth, unlike overall catastrophe rate reductions.
Crucially, as the broker points out, reinsurers remain compliant with the terms and conditions. SCOR, Hannover Re, RenaissanceRe and Everest agreed that terms and conditions, including the point of attachment, were broadly stable.
“While we will continue to count exceptions in the main reporting seasons in the U.S. and Europe, lower attachment points and overall demand appear to be the exceptions,” analysts noted.
Autonomous said “the earnings outlook for 2026 appears strong.” Everest noted that the current plan is “very good” for generating profits and that the current book is produced differently. RenRe similarly described its reasonably priced, structurally improved portfolio from 2023 as “still one of the best.”
Looking ahead to mid-year renewals, the weak trend is expected to continue. Everest suggests that while the U.S. market is still considered to have the highest price adequacy levels, industry cat prices may continue to see double-digit declines.
Analysts also noted that recent reforms in states such as Florida are also starting to show beneficial effects, which could further impact pricing dynamics as 2026 approaches.
