Insurance Market Overview

Gallagher Re first view available for 1/4. EXECUTIVE SUMMARY   The April 1 renewal activity saw more capacity and optionality for buyers, specific to class of business, geography, performance, strategy and scale. The reinsurance industry has reached a record traditional capital high of USD655 billion, supported by strong reinsurer results in 2023 and 2024. Many reinsurers are expecting attractive underwriting results and double-digit ROEs in 2025, assuming natural catastrophe losses stay within their 2025 budgets.    Growth and shareholder returns Reinsurers are eager for growth but are tempering stakeholder expectations regarding the extent of growth achievable in 2025. There is a noticeable trend of increased dividends and share buybacks as reinsurers address demands to utilize excess capital effectively.   Primary market conditions and catastrophe events  Primary companies have experienced varied fortunes over the past two years, influenced by localized losses and portfolio remediation efforts. The California wildfires serve as a poignant reminder of insurance's critical role in rebuilding lives and economies. These events raise questions about secondary perils and the necessary oversight for efficient market functioning.   Regional insights: Japan  Japan's headline rate changes indicate accelerated softening compared to major international renewals. Historical high catastrophe pricing post-2018 and 2019 typhoons has led to favorable conditions for buyers in 2024. Reinsurers' strong growth desire across various lines contributed to this positive movement.   Specialty markets and future outlook In specialty markets, the settlement of Ukraine/Russian aircraft leasing losses has prompted reserve increases among specialty (re)insurers. The global reinsurance market is expected to continue its differentiated approach to risk-adjusted rate reductions, focusing on maintaining profitable accounts while addressing loss-making ones.   Conclusion The pressure on reinsurers to demonstrate profitable capital deployment will intensify unless reinsurance demand increases over the next nine months. Reinsurers face choices between enhancing shareholder returns through dividends and buybacks or pursuing growth via mergers and acquisitions. While smaller acquisitions are gaining momentum, larger-scale M&A in the reinsurance sector remains a possibility. #insurance #reinsurance

The reinsurance market is quietly changing gear. The signals are clear if you’re close to renewals: timelines are compressing, quotes are landing late, underwriting teams are stretched, and “January capacity” is firmly back in play. That combination usually only appears when the market senses a turn. And it is turning. After several years of strong performance, capital is flowing back into reinsurance at scale — and with intent: • 5–7 new Lloyd’s syndicates and platforms preparing to write into the 2026 cycle • Cat bond and ILS issuance running at $20–25bn • Global reinsurance capital moving towards $820–860bn • Institutional investors re-engaging through sidecars, quota shares and structured capacity • Growing appetite for aggregate, multi-year and specialty risk Capital does not arrive without consequences. Across a number of classes, competitive tension is returning. Capacity is easier to assemble, terms are gradually loosening, and in some segments we are already seeing pricing pressure of 10–15%, despite another $100bn+ year of catastrophe losses. What changes next: • Reinsurers will need to work harder for returns — underwriting quality, portfolio construction and capital efficiency will matter more than headline growth • Cedants will see more options, greater leverage and faster shifts in renewal dynamics • Clients should benefit from improved availability and, over time, more efficient pricing • Market structure will continue to evolve, with tech-enabled MGAs and specialist platforms scaling as capacity expands For portfolios spanning London, AsiaPac, Latin America, the Caribbean, specialty international and emerging markets, this is a constructive phase — provided discipline holds and capital is deployed deliberately. The market isn’t breaking. It’s recalibrating. And 2026 will be a year that sets direction, not just prices. #Reinsurance #LondonMarket #Insurance #Lloyds #CapitalMarkets #CatBonds #Underwriting #SpecialtyInsurance #InsuranceLeadership

January means reinsurance time 🤗 For those unfamiliar, the bulk of the world's Property, Catastrophe and global retrocessional business is typically renewed on 1/1. This is widely considered to be the most reliable leading indicator for what insurance rates will look like in the year ahead. 1/1/26 reinsurance renewals brought generally good news for insureds. 2026 represents the sharpest decline in risk adjusted global Property insurance rates since 2014. Property insurance remains in a ‘buyer’s market’, characterized by competitive pricing, eased capacity, and average 10%–20% rate reductions in Property lines. Driven by record capital and strong returns, the market saw increased competition and stabilized conditions, though some tightening remained in casualty sectors - specifically in the US and for more challenging sectors like construction and real estate [particularly multi family real estate where casualty claims are most challenging]. Here are some details on 1/1/26 reinsurance renewals: - Property reinsurance rates fell by 10%-20% due to abundant capacity outpacing demand. The market shift focused on pricing, attachment points, and coverage. - Increased capacity led to accelerated market softening across many lines, driven largely by strong reinsurer returns [estimated at 17.6% ROE for 2025]. - Dedicated reinsurance capital grew by 9% in 2025. Stronger supply dynamics and high capital levels intensified competition. - 2025 insured Catastrophe losses were lower than expected, approximately 18% below the five-year average. - Casualty renewals experienced slightly improved conditions over 2025 with generally stable capacity, though some markets are still focused on lackluster performance and long-tail loss concerns. Overall, this is mostly positive signals through at least the first half of 2026. Insurers are positioned to leverage these reinsurance conditions to restructure programs and see a continuation of rate reductions occurring in 2025 on Property insurance. So - what does this mean for your business? Now is the time to leverage positive market conditions and restructure programs to be competitive before the next hard market hits. It’s easy to sit back in a soft market & enjoy easy, incremental rate reductions. This is exactly how so many people found themselves unprepared for rate increases in 2021-2024. This is not the time to be complacent. Insurance will continue to be a key component and set apart the most competitive operators from the average operator. If you’re not utilizing a competitive insurance program to reduce OpEx & increase NOI on CRE portfolios, you will be outperformed by peers who are. This will be catastrophic as the market likely begins to harden again in 2027 and beyond. Insurance is not the sexiest way to value engineer, but it is one of the most consistently reliable.

**The fronting insurance market hit $24bn in gross premiums in 2025, and the underlying results are flashing red. * **Growth is accelerating** up 17% YoY, far outpacing the broader commercial lines market (mid-single digits). **Reinsurers are doing the heavy lifting** with nearly 70% of fronting premiums ceded to non-affiliates, meaning reinsurers are quietly absorbing the loss-development shortfall. **Loss triangles keep deteriorating** across every accident year from 2019-2024, loss ratios are 10-15 points worse than the broader industry, and the gap is widening, not closing. **Every major line is struggling** including other liability, commercial auto (with mature accident years pushing past 120% loss ratios), and even workers' comp, historically the industry's most profitable line. The core tension: fronting carriers are built on the assumption that reinsurers perform as modeled. If that assumption breaks down, these companies are left holding risk they were never designed to carry. **Key things to watch:** capital raises at major fronters, rating actions, program exits, and reserve charges on AY 2021-22. Fronting and reinsurance are no longer separate trades. They're one interconnected bet, and the data suggests the bill is coming due! Note below>>> #InsuranceinsiderUS

𝗧𝗵𝗲 𝗺𝗼𝘀𝘁 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗔𝗜 𝘀𝗵𝗶𝗳𝘁 𝗶𝗻 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗶𝘀 𝗵𝗮𝗽𝗽𝗲𝗻𝗶𝗻𝗴 𝗶𝗻 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲, 𝗻𝗼𝘁 𝗿𝗲𝘁𝗮𝗶𝗹. Reinsurance is entering a new era. Not because of pricing cycles. Not because of cat events. Because AI is reshaping how capital decisions are made — in real time. For decades, reinsurance modelling followed the same rhythm: Annual reviews, quarterly adjustments, periodic recalibration. But 2025 broke that rhythm completely. • Loss trends are changing too fast. • Climate intensity is no longer seasonal. • Repair and medical inflation are unpredictable. • Exposure distribution is shifting weekly. • New risk classes are emerging faster than traditional models can absorb. That’s why reinsurers and CRO teams are now turning toward 𝗰𝗼𝗻𝘁𝗶𝗻𝘂𝗼𝘂𝘀-𝗹𝗲𝗮𝗿𝗻𝗶𝗻𝗴 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗺𝗼𝗱𝗲𝗹𝘀. And the change is huge. 𝗛𝗼𝘄 𝗔𝗜 𝗶𝘀 𝗯𝗲𝗶𝗻𝗴 𝘂𝘀𝗲𝗱 𝘁𝗼𝗱𝗮𝘆: • AI updates loss projections the moment new data enters the system. • AI runs stress scenarios daily instead of annually. • AI identifies new accumulation hotspots before they become a problem. • AI spots portfolio drift early, not after the fact. • AI blends macro-signals, climate data, and claim frequency into weekly reserve guidance. • AI recalculates capital needs with fewer assumptions and more live indicators. This isn’t about replacing actuarial work. It’s about giving actuaries, CROs and reinsurance teams a sharper instrument. 𝗪𝗵𝗲𝗿𝗲 𝘁𝗵𝗶𝘀 𝗶𝘀 𝗵𝗲𝗮𝗱𝗶𝗻𝗴 𝗻𝗲𝘅𝘁 (2026–2030): • Portfolio models that adjust dynamically as exposures shift. • Capital buffers that respond in real time to emerging volatility. • AI-driven treaty structuring that reduces blind spots in attachment points. • Predictive views of where the next loss clusters will form. • Underwriting engines that link frontline decisions with capital impact instantly. • Reinsurance pricing that adapts to live risk signals instead of historical curves. Reinsurance has always been about understanding uncertainty. AI is simply giving leaders a clearer, earlier view of it. The insurers and reinsurers who treat capital as a living, learning system, not a once-a-year exercise, will dominate the next decade. AI isn’t transforming reinsurance. It’s redefining it.