Moody’s keeps stable reinsurance outlook – despite risk environment ‘not actually stable’

Moody’s Ratings issued a stable reinsurance market outlook ahead of the Rendez-Vous de Septembre conference (6 to 9 September 2026) this year, observing “strong balance sheets” and maintained “underwriting discipline” from reinsurers amid soft cycle conditions and a fast evolving risk landscape.

Addressing trade press at an in-person event in London on 1 September 2026 – in line with publishing a bulletin entitled Outlook stable as underwriting discipline, strong balance sheets offset lower prices – credit agency Moody’s pinpointed an amalgamation of “high profits”, “lots of capacity” and “an evolving competitive landscape”.

Moody’s cited these as all contributing to an overall stable market rating, despite the fact that “the sector in which reinsurance companies operate is not actually stable”.

For Benjamin Serra, senior vice-president at Moody’s Investors Service, the evolving risk landscape – which includes geopolitical and technology risks, development and liability risks surrounding artificial intelligence (AI) and data centres – presents “an opportunity for reinsurance companies”, especially considering the market’s current “good financial strength” underpinned by “a lot of capital”.

He said: “The competitive landscape is evolving, but the risk landscape is also evolving. New risks are an opportunity for reinsurance companies.

This is a source of growth, but these new risks are also more difficult to assess and manage [because they can] create accumulation risks.”

Showcasing discipline

Serra noted that underwriting discipline is a key driver of Moody’s stable market rating, with the firm reporting that reinsurers are maintaining hard market rate approaches from 2023 into the subsequent soft cycle that the sector is experiencing today.

This method primarily saw reinsurers raise attachment points, with primary carriers retaining more risk in response.

“Since 2023, we have not seen a lot of changes in reinsurance conditions,” Serra explained. “That means that reinsurance companies are maintaining their discipline in terms of underwriting.

“Although we know there will be clearly more pressure from ceding companies to get better conditions in the [next] renewals, we still expect reinsurance companies to be disciplined – even if it does not mean they do not have appetite for catastrophe risk.”

Linked to this underwriting discipline, Serra added that there has been a slight pivot in reinsurers’ catastrophe appetite, with “high frequency events” that have “low return periods” being shunned in favour of “low frequency” or “more extreme” events.

Serra’s colleague, Brandan Holmes, senior vice-president at Moody’s Ratings, agreed with this view.

He said: “Reinsurers had been carrying a lot of this frequency risk. And by the reinsurers stepping back from the frequency risk, putting that back to the primaries and raising the prices, what it actually forced the primaries to do is go back to their customers and increase rates.

“And that’s why you see the primary [rates are] coming back up and the insurance system as a whole is more healthy because there’s more adequate rate paying for the risk now than there was back in 2022.”

Getting reserving right

This underwriting discipline has fed into the other key driver of Moody’s stable outlook, Serra continued, of “strong balance sheets”, “strong capital” and “high solvency ratios”.

However, Serra added that improved claims reserves have also influenced reinsurers’ positive financials of late.

He explained: “We have seen some reserve strengthening in the US casualty segment and that may continue. But we see also lower reserve releases, which partly reflects a conservative approach from some reinsurance companies [that] have used the strong resource from recent years to improve the adequacy of the reserves. That’s actually a positive factor.

“Reinsurance companies have strong balance sheets. They have a lot of capital, so there’s a lot of capacity in the reinsurance market. They also have relatively high profits and that makes it harder for reinsurance companies to ask for higher prices [from] their clients.”

MGAs mark a ‘real theme’

A further element driving “intense competition” in the reinsurance market is the “fast growing” managing general agent (MGA) landscape, which has been successfully catching the eye of private equity and venture capital firms of late, Serra noted.

Moody’s expanded on this, stating: “Private capital also affects the reinsurance industry indirectly through the fast growing MGA sector. MGAs – specialist intermediaries that underwrite on behalf of insurers in return for a fee – have in recent years attracted significant private equity and venture capital funding.

“MGAs typically underwrite risks on behalf of licensed insurers, fronting carriers or Lloyd’s of London syndicates. A significant portion of the risk they underwrite is subsequently transferred to reinsurers.

“The rise of the MGA sector has allowed a growing number of reinsurers from Asia, Africa, the Middle East and the Caucasus region to win international business, fuelling competition.

“Some MGAs have started to write long tail US casualty exposures with a limited track record, with a risk of under-reserving if their loss cost assumptions are too low.”

Richard Morgan, chief executive at Marsh Re Bermuda, added that MGAs are also offering new capacity in the trade credit reinsurance class – a line he described as “very profitable and attractive” in recent years.

He continued: “There has been new capacity into that market, particularly from MGAs. MGAs [are] a real theme looking to push into the global specialty space.”