Kevin J. O’Donnell, president and chief executive officer (CEO) of Bermuda-based reinsurer RenaissanceRe (RenRe), said he expects the supply and demand dynamics seen at January 1 renewals in real estate catastrophes to continue into mid-year renewals, but believes the robustness of rate adequacy will produce results similar to those the company achieved in January 2026.
Yesterday, during RenRe’s fourth quarter and full-year 2025 earnings call, O’Donnell and David Marra, executive vice president and group chief underwriting officer (CUO), discussed the company’s 1.1 2026 renewal experience amid soft real estate cat rates.
“Our property cat rates are down a lower percentage. We have identified some opportunities for growth, which should bring revenue premiums and property cat rates down to only the mid-single digits, excluding the impact of reinstatement premiums,” O’Donnell said.
Later in the conference call, the CEO confirmed that real estate catastrophe premiums are expected to decline by mid-single digits for full-year 2026, as RenRe expects supply and demand dynamics of 1.1 to continue in the coming months.
“So we expect continued lower rates at mid-year renewals. Having said that… I think there’s a lot of focus on rate changes and if we think about rate adequacy, it’s a different story. Rate adequacy at mid-year renewals is very strong. A lot of it is concentrated in the U.S. and a lot of it has been affected by the wildfires. So we’re renewing at the same risk-adjusted decline. So if the bottom line is a slightly larger cut, the robustness of rate adequacy should produce the same results as we did in 1.1 Similar results were obtained,” he said.
Building on this, Marra provided additional insights into the company’s outlook for property catastrophe reinsurance rates in 2026.
“First, we said we do see stress, but we’re starting from a very good position, so rate adequacy remains strong. I can break it down for you. What we’re seeing in the overall cat ledger is in the low teens, which is a little bit independent, the U.S. cat ledger ended at 1.1 Update, which is about one-third of the U.S. cat book, is down about 10%, while the international and global portfolios are down about 15%. So, in terms of what we’re facing, not all risks are the same, and both have their own appeal,” Marra said.
“But the rating levels remain high. We’re also seeing very strong terms and conditions consistent with the last three years. So it’s not so much about how we’re going to respond to the rate declines. We have strong headroom, exposure to all businesses, and a lot of options to build a portfolio. We do see growing demand on the U.S. side, there are signs of 1.1, and we expect more in the second quarter, so that will bring opportunities, but our approach is to pick the best opportunities and make sure we get the best opportunity to sign up and build an attractive portfolio,” he added.
In her opening remarks, Marra delved into RenRe’s updated strategy and goals for the real estate market.
“Our goal in the real estate disaster is to maintain our existing portfolio and deploy additional capacity into attractive opportunities. Reinsurance supply has increased following several years of strong performance. This additional supply has led to increased global stress and average rates falling into the teens. For our portfolio, retention and terms and conditions have remained consistent with recent strong levels, and we have successfully renewed existing parcels and selectively deployed new restraints across our owned and managed balance sheets.
“Overall, we expect first-quarter gross premiums to be reduced by lower interest rates, which will be partially offset by growth in the new demand model. Margins on the real estate catastrophe book remain well above the cost of capital,” he said.
CUO went on to highlight numerous mitigating factors for the impact of falling interest rates on reinsurers’ net retained business.
“First, we shaped our portfolio with ceded reinsurance, which improved our net results. Ceding rates across our portfolio fell by high teens. Additionally, we renewed a series of Mona Lisa Cat bonds at greater size, which narrowed spreads by more than 50% on a risk-adjusted basis. Finally, we shared a significant portion of our portfolio with Capital Partners vehicles that generate fee income and are less sensitive to interest rate changes.
“This strategy has averaged over 50% underwriting margins over the past three years and we are confident in our ability to continue to generate strong returns across our property catalog,” Marra said.
