Howden Re expects disciplined growth and gradual softening in credit and political risk market

Howden Re’s credit and political risk insurance (CPRI) team said the CPRI market delivered another year of strong growth and performance in 2025.

Phil Bonner, managing director, global specialty treaty at Howden Re, said 2025 combined growth, discipline and resilience across the market.

“2025 was defined by a rare combination of strong growth, disciplined underwriting and sustained outperformance across the CPRI market,” Bonner said.

“Elevated demand from banks and corporates was largely matched by increased capacity, allowing incumbents and new entrants to expand participation without undermining technical standards,” he said.

“Despite macroeconomic and geopolitical volatility, claims experience remained stable with pricing easing only gradually and underwriting rigour continuing to distinguish CPRI from broader commercial lines,” Bonner added.

Howden Re said supply and demand dynamics remained broadly balanced during the year.

Higher client uptake was met by a corresponding rise in capacity, although a focus on high quality risks led to pockets of overcapacity and a general easing in pricing.

The firm said pricing reductions were measured across the wider market and constrained by conservative underwriting and structural supply limitations.

Incumbent insurers sought to increase line sizes in 2025 by offering more capacity on a per risk basis.

This additional supply, alongside several new entrants, helped absorb elevated demand from banks and corporates navigating a volatile macroeconomic and geopolitical environment.

Howden Re said demand nevertheless continued to outstrip available capacity in certain areas of the market.

Limited available data supports this picture of relative outperformance.

In the US, credit, surety and fidelity business, viewed as a reasonable proxy for the global CPRI market, grew by 10% in the first half of 2025 compared with 5% for major US commercial lines.

The incurred first half 2025 loss ratio for credit, surety and fidelity was 26% compared with 57% for major US commercial lines.

The three global credit insurers recorded average combined ratios of 75% in 2024.

High underwriting standards remain a defining feature of the CPRI market, with insurers and reinsurers targeting a narrow volatility window.

Howden Re said there was no material deterioration in claims during 2025 despite significant macroeconomic uncertainty.

It said underwriting rigour and active portfolio management helped shield the market from losses linked to sovereign defaults, Russia Ukraine war payments and a small number of high profile private credit defaults.

Marius Fischer, managing director, reinsurance broking credit and financial risk at Howden Re, said the market is expected to continue along a path of gradual and selective softening in 2026.

“Looking into 2026, the CPRI market is expected to continue along a path of gradual and selective softening, driven by strong competition for more standardised risks but underpinned by resilient demand from banks and corporates seeking capital relief and balance sheet protection,” Fischer said.

“Increasing demands from Funds are also fuelling opportunity,” he continued.

“This is bolstered by increased participation from institutions that historically were not major buyers, including US banks,” Fischer said.

“Absent a major loss event, underwriting discipline and constrained specialist talent are likely to act as natural stabilisers, preventing any abrupt erosion of margins despite increasing capacity,” Fischer added.