Gallagher Re First View: Rate Reductions Shape January 1 Renewals

Gallagher Re's First View: Options and Opportunities (January 2026) describes the January 1, 2026, reinsurance renewal as a period characterized by "choice, change, and opportunity," with pricing identified as the headline development. According to Gallagher Re, plentiful capacity—supported by attractive returns through 2025 and only modest growth in demand—helped drive significant rate reductions across much of the global reinsurance market.

Capital Strength Supported Broad Pricing Pressure

Gallagher Re reports that increased available reinsurance capital was driven primarily by strong retained earnings following several years of meaningful pricing and structural adjustments across insurance and reinsurance. Gallagher Re said the market entered 2026 with record levels of capital as well as an active motivation to deploy it, contributing to competitive dynamics across multiple lines and territories.

Renewals Emphasized "Down Pricing" over "Up Risking"

Structural improvements were described as more nuanced than pricing movement. Gallagher Re said many cedants focused on maximizing savings—"down pricing" rather than "up risking"—rather than pushing additional risk into the reinsurance market. According to the report, there were exceptions where buyers achieved trade-offs that paired improved coverage with price outcomes, and Gallagher Re expects continued engagement around these decisions into the mid-year renewals.

Catastrophe Loss Experience Shaped Market Sentiment

Gallagher Re notes that reinsurer profitability and capital levels were supported by a relatively light year for large insured catastrophe losses, estimated at approximately 10 percent below the 10-year average as of early December, with losses more concentrated in nonpeak perils. However, per the report, overall ground-up insured catastrophe losses still exceeded $120 billion for the sixth consecutive year, and cedants' willingness and ability to retain that level of catastrophe loss will influence additional risk transfer decisions during 2026.

Property: Double-Digit Declines and Broader ILS Participation

In property, Gallagher Re describes a renewal environment that favored buyers, with stronger choice in terms and structures and double-digit risk-adjusted reductions widely available. According to the report's property executive summary, risk-adjusted pricing for nonloss impacted catastrophe programs in major markets declined 10 percent to 20 percent on average, while global per-risk pricing reductions were more limited, with nonloss impacted programs down 10 percent to 12.5 percent on average.

Gallagher Re also reports that some clients prioritized structural changes, particularly regaining or improving frequency protection. Per the report, aggregate and second/third event capacity was more available than in the prior renewal, though reinsurers remained selective, and success depended on a clear strategy and data-backed support. Gallagher Re adds that growth in the insurance-linked securities (ILS) market helped fuel competitive dynamics, including more aggressive positioning at the upper ends of catastrophe towers and expanded appetite for secondary peril exposure and aggregate covers.

Casualty: Elevated Loss Trends and Focus on Data, with Generally Stable Outcomes

In casualty, Gallagher Re finds that the US litigation environment, prior-year loss development, and elevated loss trends remained central themes at renewal. According to the report's casualty executive summary, uncertainty around loss activity in recent accident years and its implications for ultimate performance remained a major focus, and the renewal emphasized deeper interrogation of underwriting and claims data.

Per Gallagher Re, this translated into stable outcomes in US casualty placements from both a capacity and pricing perspective. The report states that in the quota share business, ceding commissions moved up or down by low single-digit percentages in most lines, while excess of loss pricing generally stayed risk-adjusted flat.

Outside the United States, Gallagher Re describes healthy competition for international casualty business, with appetite expanding as reinsurers sought growth and diversification. According to the report, Lloyd's and international casualty markets remained competitive, with ceding commission up and rates down 5 percent to 10 percent.

Specialty and Cyber: Oversupply of Capital Drove Reductions and Broader Coverage

In specialty lines, Gallagher Re reports that oversupply of capital increased competitive pressure and supported broader coverage. Per the report, loss-free programs experienced significant rate reductions, while aircraft leasing losses made some large renewals complex; Gallagher Re notes that many loss-affected aircraft leasing programs renewed largely with reinsurers paying claims, which contributed to stability even as negotiations remained difficult.

In cyber, Gallagher Re states that capacity was more than adequate, exceeding levels available several years ago. According to Gallagher Re, buyers were reluctant to cede profitable business via quota share, and this reduced demand supported material increases in ceding commissions on proportional treaties at January 1, along with risk-adjusted rate reductions and/or lower attachment points for excess of loss structures.

Structured Solutions: Increased Demand Amid Favorable Conditions

Gallagher Re reports strong demand for structured reinsurance solutions designed to support objectives such as earnings stabilization, dividend protection, and balance sheet smoothing. Per the report, reinsurers responded as new entrants emerged and product refinement continued, with market conditions described as unusually favorable for innovation in structured solutions.

Alternative Capital and ILS: Continued Growth and Expanding Scope

Gallagher Re reports continued growth in alternative capital activity, including ILS, with expanded covered classes, perils, and structures. According to Gallagher Re, ILS issuance exceeded $20 billion for the year, and participants sought expanded opportunities, including nearly doubling long-tail activity over the past year.