An influx of retained earnings, new capital and expanding insurance-linked securities capacity drove risk-adjusted reinsurance pricing lower at the Jan. 1, 2026, renewals, with reductions across property-catastrophe, retrocession and direct and facultative lines bringing rates close to levels last seen four years earlier, according to Howden’s renewal report.
Dedicated reinsurance capital reached about $501 billion at year-end 2025, up 8% year on year, lifting the sector’s solvency margin ratio to 113%, its highest since 2021. Capital growth exceeded premium growth, reinforcing supply-side pressure across most classes despite elevated catastrophe activity, including the Los Angeles wildfires, one of the largest reinsured losses on record.
Risk-adjusted global property-catastrophe reinsurance rates-on-line declined by an average of 14.7% at the January renewals, compared with an 8% reduction in 2025, marking the largest annual decrease since 2014. Program-wide reductions typically ranged from 10% to 20% in the US, where pricing softened even as reinsurers maintained discipline in structurally challenged layers. Howden Re noted in its mid-year June 1 renewal report that rate-on-line outcomes ranged from flat to down 20%, depending on loss experience and attachment point, with programs generally oversubscribed despite lower pricing.
The pattern extended beyond January. In Asia Pacific, Japan-focused catastrophe excess-of-loss renewals at April 1, 2025, recorded 10% to 15% risk-adjusted reductions, easing from a high base established after years of post-loss hardening, according to Howden Re. The broker said the January 2025 California wildfires did not meaningfully constrain supply at the April renewals, reinforcing the view that capital remained available despite headline loss events.
In Europe, low loss activity and excess capacity resulted in average reductions of 10% to 20%, with France, Italy, Switzerland and the UK seeing declines of up to 20%, while Germany experienced more moderate decreases of 8% to 11%. Asia Pacific outcomes were mixed by territory, with loss-free markets benefiting from abundant capacity while loss-affected markets faced differentiated terms.
Property retrocession pricing softened as capacity exceeded demand, even with buyers exploring up to $800 million of additional limit in a market estimated at roughly $20bn. Risk-adjusted pricing declined by 12.5% to 21%, averaging 16.5%, with limited movement on coverage terms and continued resistance to adding non-natural perils such as SRCC and terrorism.
Global direct and facultative reinsurance recorded average risk-adjusted reductions of 15% to 20%, extending softening that began in 2025. Casualty outcomes were more stable. Most US treaties renewed at expiring terms, while London market casualty excess of loss programmes recorded reductions of 5% to 10%.
The same capital dynamics shaping traditional reinsurance were also evident in specialty lines. In cyber reinsurance, Howden Re reported that rising capital levels and improved underwriting performance have supported market growth, while highlighting the need for more retrocession capacity as non-proportional exposure increases. David Flandro, head of industry analysis and strategic advisory at Howden Re, said future growth will depend “on insight as much as capital,” pointing to the importance of analytics and structure alongside balance sheet strength.
With core programmes placed for less spend than anticipated and supported by strong signings, some cedents purchased supplementary cover to manage retentions and volatility, while others plan to deploy savings during the first half of 2026. Howden said current conditions are expected to persist into 2026, subject to loss activity, financial volatility and capital costs.
