Reinsurance broker Gallagher Re has said that the January 2026 renewals will be shaped by capital abundance and product innovation, with success to be measured by how reinsurers and clients align on supporting “volatility protection at acceptable levels of risk transfer.”Reinsurance remains “robustly profitable” which has now driven “substantial excess capital”, the broker’s team explained in a briefing just in advance of the Monte Carlo Rendez-vous event last week.This is expected to drive more choice and opportunity for reinsurance buyers at the 1/1 2026 renewals, as clients look to optimise their risk management, Gallagher Re said.The capital build-up may continue as well, as Gallagher Re notes that absent major losses, so with a normal level of catastrophes etc, it forecasts reinsurers will report full-year returns-on-equity of around 17-18% for 2025.

Tom Wakefield, Global CEO at Gallagher Re, said, “To put this in context, we estimate it would take a USD115 billion insured loss event, on top of current 2025 cat losses, plus normalized catastrophe losses for the rest of the year, to reduce the average industry ROE for the 2017-2025 period to a low double digit level.” It’s interesting to note that the Gallagher Re team believe that some reinsurers are already being challenged to deploy capital as they would want to.“It has become clear over the mid-year renewals that reinsurers’ ability to deploy as much capital as they would like has been challenging,” the broker explained.Hinting at the fact they expect capacity providers to deliver more options and flexibility to their reinsurance buying clients, Gallagher Re said that, “In today’s market, clients have a lot of choice in how they optimise their risk management: whether that’s through managing attachment points, structural innovation such as frequency covers, shared limit, increasing the number of perils covered, duration and other coverage changes will all be up for discussion this year.

“Therefore, reinsurers that are looking to grow will generate more active interest from buyers by offering products that align closely with cedants’ strategic objectives, and support volatility protection at acceptable levels of risk transfer.” All of which indicates there is going to be a push to loosen terms and secure more aggregate, sideways or frequency protection for clients.Lara Mowery, Chief Commercial Officer at Gallagher Re, stated, “Available capital, attractive margin, and the desire for growth are all coming together to fuel greater market responsiveness and product innovation.” Will Thompson, Head of Global Clients at Gallagher Re, added, “In the next phase of the market cycle, the challenge for insurers will be how to deliver on growth targets in a softening rate environment.“We will be advising our clients not to accept the status quo, but to push for structures and coverage that provide increased value and represent reinsurer appetite today, rather than appetite from 2023, to help our clients deliver their strategic goals.” Andrew Newman, President of Gallagher Re, explained during a pre-Monte briefing that insurance-linked securities (ILS) alternative capital play a “pivotal role in the global (re)insurance industry, with 2025 representing the third consecutive year of record growth in cat bond issuance and non-life assets under management.” The growth in cat bonds and also in reinsurance sidecars is “strategically interesting,” Newman added.

Newman said that with “large pools of highly sophisticated capital seeking insurance risk as an asset class,” reinsurance buyers have “immense optionality about how they weight the internal and external component of their capital stack.” There are clear expectations at major reinsurance brokers for risk capital providers to provide their clients some slack at the next renewals and the negotiations over the trade-off between rate and terms is likely to be fierce..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.