Antares Global CEO Mike van der Straaten (pictured above) has provided an assessment of reinsurance market conditions ahead of the Baden-Baden meetings, focusing on the dynamics expected for the Jan. 1, 2026, renewals.
Van der Straaten noted that market conditions are stable across all major regions, including the United States, with similar trends seen globally. Pricing discipline remains in place, though the pace of firming has slowed as capacity returns to the market.
Cedents are seeing modest improvements in terms, particularly in peak zones, while reinsurers continue to be selective and focused on risk quality.
He said softening is anticipated for the Jan. 1 renewals, with risk-adjusted Rate on line (ROLs) expected to ease by high-single to low-teen percentages if there are no major catastrophe losses. However, ROLs are still above long-term averages.
Van der Straaten described capacity as plentiful, both from rated and alternative sources, supporting a more orderly renewal season. The balance of power is gradually shifting back toward buyers, establishing a more sustainable footing for 2026.
The catastrophe market is seeing controlled moderation, with underwriters managing exposures carefully and deploying capacity selectively. The benign loss environment in most core territories has put downward pressure on pricing, but overall levels remain resilient. Competition is most pronounced at risk-remote layers, where spreads are tightening.
Ultimate net loss (UNL) structures and catastrophe bonds are increasingly replacing industry loss warranties (ILWs), reflecting investor comfort and liquidity at higher attachment points. Van der Straaten observed that while wildfire losses have slowed the pace of softening, the remainder of the hurricane season, potential capital trapping, and new capital inflows will influence the year-end trajectory.
Insurance-linked securities (ILS) capital continues to shape upper-layer pricing in both US and international markets. Competitive ILS issuance has maintained pressure on higher-attachment points, softening rates and compressing margins. Investor appetite remains strong, provided loss activity stays low and returns are steady.
Van der Straaten said a sustained low-loss year could attract further capital inflows after Jan. 1, prolonging competitive conditions.
On consolidation, van der Straaten said tightening margins and the plateauing of the hard market cycle are prompting renewed strategic discussions. Larger groups are seeking scale and diversification, while mid-tier players are considering partnerships or mergers and acquisitions to improve competitiveness.
He noted that execution remains selective due to valuation gaps, capital considerations, and regulatory hurdles, but the rationale for consolidation is strengthening as the market normalizes.
It is worth noting that alternative capital sources, including the catastrophe bond market, have played a larger role in the 2025 reinsurance renewals. The influx of alternative capital has provided additional capacity and influenced pricing trends, contributing to a more stable and competitive environment for both insurers and reinsurers.
Macroeconomic factors entering 2026 include persistent inflation, geopolitical instability, and elevated interest rates. Improved yields provide some offset, but volatility in capital markets could affect returns and investor sentiment.
Protectionist policies and slower global growth may influence insured exposures and loss costs, while a sudden tightening in liquidity or credit would be a key downside risk. Van der Straaten said the sector enters renewals with strong capitalization and a disciplined approach to risk.
Overall, van der Straaten described global reinsurance markets as aligned and disciplined heading into Baden-Baden. The combination of a benign loss year, ample capacity, and consistent ILS activity is exerting pressure on pricing, but levels remain solid and market behavior is rational.
He expects a measured softening into Jan. 1, with reinsurers focused on maintaining underwriting discipline and differentiation as the market moves toward equilibrium.
What are your thoughts on this story? Please feel free to share your comments below.
