In a notable reversal of recent market trends, distressed casualty placements were traded into property positions during the January 1, 2026, reinsurance renewal cycle – a complete reversal from trading three years ago, according to a recent report by Guy Carpenter.
The broker noted that there are nuances in casualty reinsurance renewal outcomes based on region, structure, historical results and the size of outbound portfolio renewals on January 1, with reinsurers prioritizing portfolio diversification and long-term relationships, rewarding cedants for structural discipline and historical performance.
According to Guy Carpenter’s Reinsurance Renewal Report for January 1, 2026, clients continue to remain disciplined in terms of limit management, terms and conditions offered to original clients and maintaining appropriate attachment points.
“While pricing has ranged from positive (U.S. exposure liability) to negative (E&O/PI, non-U.S. exposure liability) and somewhere in between (U.S. D&O), the structural changes clients are implementing in their portfolios have given reinsurers greater confidence in the face of continued increases in U.S. litigation costs,” the analysts noted.
As a result of this discipline, reinsurers’ loss trends have remained relatively stable year-on-year, as shorter limit deployments have proven highly effective in managing loss severity trends.
The report highlights that loss experience and structure are two keys to rebuilding outcomes.
“Reinsurers prefer to provide support on a pro-rata basis as they have greater confidence in overall portfolio performance. Therefore, pro-rata placements will be renewed upon maturity if experience and portfolio composition are in line with expectations,” the report states.
It continued: “If performance is significantly better than expected, there will be a slight improvement, but new capacity will be needed as existing capacity is generally reduced. If results are significantly worse than expected, corrections will be made on a case-by-case basis, and cross-business line and placement transactions can easily occur.”
Regarding excess loss settlement, the report notes that results vary around the world. The point of attachment is a key factor in this outcome, especially where historical experience is challenging and provides insufficient credit for forward strategies.
“Projects with lower add-on fees, particularly in the US, are feeling greater pricing pressure due to the impact of litigation funding and claim severity. We are seeing rates increase by approximately 10% on these projects,” the analysts explained.
Adding: “Treaties with higher attach rates experience less interest rate pressure as higher attach points and reduced limit allocations have less experienced combined beneficial effects and, more importantly, there is less risk in tiers that keep pricing stable and even see some modest rate reductions in exceptional circumstances.”
The report also noted soft trends in Asia Pacific, Middle East and Africa markets. Competition and increased capacity from European and Bermudian airlines seeking geographical diversification has resulted in more favorable terms for cedants in these regions.
While U.S. and international market renewal trends are slightly ahead of the 2025 cycle, Asia Pacific is moving more slowly as players deal with these softer conditions.
Additionally, the traditional casualty market continues to adapt to the rise of alternative risk transfer (ART), as customers weigh alternatives such as sidecars against the benefits of traditional structures.
“In some cases, this will reduce the volume placed in traditional markets, which, combined with substantial capacity, can lower market clearing prices for reinsurance programs,” analysts said.
Conclusion: “Guy Carpenter’s analysis suggests that the health of the U.S. casualty market has improved, with cumulative ratios 64 percentage points above trend based on losses incurred since 2019.
“In addition to significantly increasing rates, U.S. operators have been constrained by limited deployments, with average capacity reductions of -40% to -60%.”