Reinsurance capital providers that have the best listening capability and the strongest appetite for creative problem-solving will see the most cedents “knocking at their door” as they rethink their reinsurance strategies in this soft market, according to Gallagher Re’s Ditte Deschars.
In a recent interview with Reinsurance News ahead of the annual Baden-Baden reinsurance symposium, Gallagher Re’s EMEA Chair, Deschars, highlighted empathy and client engagement as key differentiators in this competitive and evolving landscape.
The executive stated: “For any capital to be relevant, reinsurers should be empathetic, they must have a strong listening approach, listen to what the clients need and then really think about how they can help with that, within their own risk appetite framework, so that it works for both parties.
“Capital providers that have the best listening capability, and look to find solutions, will see that many cedents will knock on their door.”
Cedents are being advised to capitalise on the abundant supply of capital and softening market conditions, but not only to chase quick discounts, but to restructure their broader reinsurance purchasing for longer-term resilience.
While buyers in a softening market frequently prioritise reductions and short-term financial gain to meet certain KPIs, Deschars cautioned that doing so risks missing a prime strategic window.
“The cycle that we’re in will allow clients, of course, to have some cost benefits,” Deschars observed. “But they can do so much more with their buying, they can reconsider appropriate retention levels and the breadth of coverage, and not just the terms but also the conditions of the coverage.”
Adding: “We are advising clients to take full use of the current market cycle, to reconsider the scope to be even better aligned with client’s long-term objectives and to really create longer term value. If you don’t do it now, you might miss a good opportunity, as you never know what is going to happen next year. So, think about your objectives longer term and shape your programme to fit that strategy.”
Unlike previous market cycles triggered by distress or rapid capital degradation, the current softening phase is unfolding from a position of exceptional balance-sheet strength, Deschars noted.
She said: “The market has been softening for a while, but it is softening from an incredibly strong financial basis. Reinsurers have had great profitability; the returns are well above cost of capital. We see that the capital is continuing to build up because of the retained earnings, and this is despite higher dividend payouts, despite reserve strengthening.”
The executive added that Gallagher Re expects these healthy returns to carry forward into 2027, providing a stable foundation for cedents and reinsurers to build sustainable partnerships.
A critical element of the current market dynamic is the structural expansion of capital providers, spanning both traditional and alternative balance sheets.
“More buyers are seeing the many different sources of capital available that are attracted by different sets of risk profiles, and returns,” Deschars noted. “There isn’t just one innovative capital structure that will create the best value. It’s actually more about what is now happening across the broader platform of both traditional and alternative capital. And that whole platform can now serve as a much more easily available interlinked capital ecosystem for clients to take advantage of.”
“What has happened now is that we have an enlargement in the supply, which is much more flexible and open to deploy the capital to different types of risk profiles, to different types of margin matrices, etc. So, what we see today is that a much larger part of our client segment will have this whole capital ecosystem available to them, which they didn’t have a few years ago,” she added.
With capital expanding across traditional reinsurers and alternative markets, Deschars advises to focus more on sustainable reinsurance partnerships rather than commoditised capacity.
By leveraging this diverse ecosystem, cedents and reinsurers can move on to build resilient structures that optimise retentions and hold firm through market cycles.
