Tracy Hatlestad, Executive Managing Director and Global Property Segment Leader at Aon Reinsurance Solutions, said recently that the broker believes reinsurers will still be able to hit their target ROEs on property catastrophe books even with rate reductions of 10% or greater heading into the January 1st, 2026, renewals.
Aon Reinsurance Solutions held its first renewal discussion today ahead of the annual meeting of the reinsurance industry in Monte Carlo, which kicks off this weekend.
Experts from across the firm’s reinsurance team discussed current market dynamics in property and casualty, with a view to the January renewals.
Commenting on the property segment was Hatlestad, who started with an overview of the mid-year 2025 renewals, noting that reinsurers and insurance-linked securities markets were eager to deploy capacity and grow market share, despite the costly California wildfires in January.
“That dynamic led to an acceleration of buyer-friendly conditions with reinsurers offering greater flexibility in terms and conditions and options for insurers to purchase expanded coverage and new products,” she said.
Hatlestad also highlighted the 50% year-on-year growth in aggregate property cat limit placed, a trend she expects to persist as reinsurers look to support the coverage priorities of buyers.
On the current rate environment for property cat, Hatlestad said that Aon Reinsurance Solutions sees the industry sitting approximately 20% above the global index mean rate level over the latest full market cycle.
“We believe reinsurers will still be able to achieve target ROEs on their property cat portfolios with rate reductions of 10% or more going into January 1,” she said.
Although property cat rates have come down in some areas when compared with the highs of 2023, numerous reinsurance company CEOs have stressed that it is still an attractive market with adequate rate, emphasising that rates have softened but are by no means soft.
Hatlestad’s comments point to this, and suggest that reinsurers should have another year of strong profitability in 2026, despite the expectation of further rate reductions in the property and property cat space.
“Supply remains ample, and there are early indications for continued desire for growth for reinsurers, and this bodes well for insurers, as we expect demand for property cat programmes to increase by about 5% again in 2026 driven primarily by growth in the US and in EMEA,” continued Hatlestad.
Earlier in the discussion, Alfonso Valera, CEO of International at Aon Reinsurance Solutions, noted that the market is heading into the renewals with very solid results from reinsurers, both in terms of combined ratios and returns on capital, while reinsurers have a strong desire to grow.
“We definitely see the reinsurance market as being very robust, with plentiful capacity and record levels of capital serving the industry. This comes both from traditional and also alternative capitals.
“As you may know, 2025 is a record year for cat bond issuance, despite the fact that it hasn’t ended. As a firm, we encourage and we welcome new capital into the business as ultimately it will bring competition and more offered to our clients, and will create a more competitive environment,” he said.
Adding: “Now we believe that with these ingredients, we anticipate, and we believe the market will be very much a buyer’s market. We anticipate pressure on pricing, and we also see the opportunity for our reinsurance buying clients to optimize their programs, ceding more volatility and leveraging reinsurance capital to support their pursuit of profitable growth.
“Having said this, we believe that reinsurance terms and conditions remain robust after the significant reset in terms that we experienced through the hard market that started in the 2022 to 2023 renewal sessions. At the same time, we see tremendous opportunity for reinsurers, and we call on them to be creative and partner with us and our clients, to respond to insurer needs.”
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