January renewals marked a turning point for casualty reinsurance, though not in the same abrupt fashion seen in property catastrophe business, according to broker reports.
Casualty reinsurance entered the January 1 2026 renewals with a markedly different tone to property catastrophe.
Across the broker reports, casualty was framed as a line where capital availability is improving, but structural caution remains firmly in place.
Aon described the broader environment as one in which “traditional reinsurance capital is at very strong levels relative to the risk being written today, and still building, net of significant returns to investors”.
However, casualty did not experience the same outright buyers’ market conditions seen elsewhere. Instead, renewals reflected the tension between excess capital and long-tail uncertainty.
Howden Re captured this balance clearly, noting that “although there was more caution for longer-tail lines amidst scrutiny on price and reserving adequacy, there was sufficient capacity to meet demand”.
US casualty: caution still evident
In the US, casualty renewals pointed to a market that is no longer accelerating but has not yet reversed course.
Rate increases have restored some confidence, yet reinsurers remain acutely focused on trend risk.
Howden Re stated that “non-economic factors linked to litigation trends and reserve deterioration continue to keep market conditions firm in US liability lines”.
At the same time, there are signs that momentum is easing.
Howden added that “after multiple rounds of rate increases, the pace of rises in both primary and excess markets is now showing signs of moderation”.
Guy Carpenter emphasised that outcomes were highly account-specific rather than market-wide.
“Casualty reinsurance renewals had nuanced outcomes based on region, structure, historical results and the scale of the outwards portfolio,” the report said.
That nuance was particularly evident in quota share and aggregate discussions, where buyers increasingly framed casualty reinsurance as a capital management tool rather than a pure pricing exercise.
Guy Carpenter noted that “clients continued to look for reinsurers to support treaties across lines of business”.
International casualty: competition stronger
Beyond the US market, international casualty renewals were generally more viewed as competitive, reflecting both lower perceived litigation risk and reinsurers’ desire to diversify away from peak exposures.
Howden Re observed “most areas of the reinsurance market recorded price decreases at 1 January 2026 renewals, returning pricing across most major lines to levels last seen around four years ago, albeit with comparatively higher attachments and tighter terms”.
In Europe, reinsurers showed greater willingness to deploy capacity on loss-free casualty portfolios, particularly where exposure to US courts and jury systems was limited.
Aon highlighted that “an increasingly diverse range of capital providers, supporting an expanding range of insurance risks through a variety of structures, is positive news for clients”.
This was reflected in improved panel breadth and greater flexibility on programme design, even where headline pricing remained disciplined.
More capacity, but selective deployment
Across all regions, the re/insurance brokers’ reports emphasised that casualty capacity is growing, but not indiscriminately.
Aon pointed to the scale of capital now seeking deployment, noting that “global reinsurer capital reached a new high of $760bn at the end of September 30, 2025”.
At the same time, reinsurers remain wary of long-term erosion of margins.
Guy Carpenter stated that its view “recognizes industry efforts to manage limit deployment, ensure rates keep up with loss trend, and maintain adequate reserves”.
This combination of abundant capital and cautious underwriting helps explain why casualty did not follow property catastrophe into outright price competition.
Structured casualty and sidecars
One of the most notable developments at 1/1 was the increasing prominence of structured casualty solutions.
Aon reported that “we are seeing growing interest in bespoke transactions such as structured solutions, loss portfolio transfers and facultative reinsurance, including hybrid treaty or facultative facilities”.
Alternative capital also continued its gradual move into casualty risk.
Aon observed that “the casualty sidecar market [is] at $1.7bn of invested capital”.
While small relative to property, these structures are symbolically important.
Aon added that “unlike in prior years, many of the new vehicles are being set up to support longer-tailed casualty risk”.
Discipline remains a defining theme
Taken together, broker renewal reports point to a casualty market that is evolving rather than simply turning alongside property catastrophe, which has seen significant softening along with a wave of new capacity deployed.
Across casualty, capital is more plentiful and competition is increasing, but caution among reinsurers remains embedded in pricing, structure and limit deployments.
As Howden Re’s paper concluded, “the current phase of the cycle will reward underwriting excellence and innovation that unlocks new opportunities”.
No comments yet