Reinsurers at the July 1 renewals this year were reportedly keenly competitive and willing to engage in creative solutions in providing coverage, thanks to excellent returns earned by reinsurers and due to their dedicated capital reaching record highs at the end of 2025, according to the most recent ‘first view’ published by Gallagher Re.
“In this market, buyers have been able to achieve outcomes better tailored to their needs across most lines. The market has been trending in this direction throughout 2026, so these themes are not new. What distinguished the July 1 renewal is the speed at which these conditions advanced,” Gallagher Re’s CEO Tom Wakefield writes in the report, First View, A Moment for Creativity.
He notes that dedicated reinsurance capital reached a record $648-billion, figures in U.S. dollars, at the end of 2025, up 11 per cent, driven by retained earnings, while demand, meanwhile, “barely moved.”
“That widening gap between supply and demand has become the defining feature of the market,” he adds. “As long as this imbalance continues, capital management will be a prominent question for reinsurers – who remain keen to write business if the economics are acceptable but will look to other options if not.”
Also helping reinsurers is the fact that catastrophe losses have been light in the first half of 2026, this on the heels of reinsurers reporting 2025 return on equity figures close to 19 per cent. The report goes on to say the Gallagher Re’s representative composite of reinsurers is estimated to deliver a 14 to 15 per cent return on equity in 2026, despite rate softening.
“For all the pace, we are not seeing the excesses of prior soft cycles. Reinsurers’ underlying returns, though narrowing, remain strong by historical standards and comfortably ahead of their cost of equity. Pricing is converging towards technical adequacy rather than overshooting it,” Wakefield continues. “Discipline remains visible and reinsurers have continued to reward cedants who hold the line on deductibles and structural integrity.”
Emerging risk topics include artificial intelligence (AI) liability as a risk class. “We are seeing both the creation of standalone products, and the providers of existing product offerings starting to consider what this exposure means,” he writes.
Overall, he concludes saying “we are at a point where capital availability and problem solving are facilitating the return of more creative solutions at palatable prices.”
