Record reinsurance capital and muted demand at the January 1, 2026, renewals shifted negotiating leverage toward cedants, enabling price reductions, structural flexibility, and a wider range of financing options across traditional and alternative markets.
That’s the assessment revealed in the January 2026 1st View report released by Gallagher Re, which said elevated capital levels and competition for deployment set the tone across most major lines. Cedants entered the renewal period with greater choice, while reinsurers faced pressure to deploy capacity following several years of retained earnings and structural recalibration.
“The 1.1.26 renewal represented further price reduction and structural flexibility,” Tom Wakefield, Global CEO of Gallagher Re. “Technical pricing, geography, loss history, and line of business all influenced how much programs changed.
Total dedicated reinsurance capital is projected to reach $838 billion by year-end 2025, driven by about 8% growth in traditional capital to $710 billion and roughly 12% growth in alternative capital to $128 billion. Sector profitability is expected to remain sustained, with headline return on equity estimated at about 17% to 18% for 2025, in line with 2024 and above the industry’s cost of capital.
Capital accumulation was supported by a relatively light year for large insured catastrophe losses, which were about 10% below the 10-year average and concentrated in non-peak perils. At the same time, underlying activity remained elevated, with insured catastrophe losses exceeding $120 billion for a sixth consecutive year. Gallagher Re said limited loss flow into reinsurance reflected higher attachment points and loss redistribution following structural changes implemented in 2023.
Insurance-linked securities continued to play a growing role in renewal outcomes. Total ILS issuance exceeded $20 billion in 2025, while alternative capital participation in long-tail business roughly doubled over the past year. Gallagher Re chief commercial officer Lara Mowery said investor interest remained strong across property catastrophe, long-tail exposures and emerging areas such as cyber.
In property, buyers encountered a more accommodating market than in recent renewals. Risk-adjusted pricing for non-loss-impacted catastrophe programs in major markets declined by an average of 10% to 20%. While many cedants prioritized price reductions, some pursued tradeoffs between pricing and coverage, particularly to manage retained volatility.
Casualty renewals remained shaped by uncertainty around US litigation trends and prior-year development. Outcomes in US casualty placements were generally stable from both a capacity and pricing perspective, while international casualty experienced competitive conditions, with ceding commissions rising and rates declining 5% to 10%. Mowery told Artemis that capital providers remain divided on whether recent underwriting and pricing adjustments are sufficient to support long-term casualty profitability, particularly in the US.
Beyond renewal dynamics, Gallagher Re has continued to invest in scale and specialization. In December 2025, the broker agreed to acquire South Africa-based Resilea, while earlier moves included the acquisition of Australia’s Steadfast Re and the launch of a dedicated captives risk transfer team within its global facultative business. The firm said those initiatives are intended to connect clients with a wider pool of traditional and alternative capital at a time when deployment pressure remains high.
“Our top priority for the year ahead is working with our clients to tailor their reinsurance buying strategies at a moment of abundant capacity across all lines of business,” Wakefield added. “There are plenty of options and opportunities to improve reinsurance coverage, and we intend to explore all of them.”
