With the Monte Carlo Rendezvous just a few days behind us and with the Baden-Baden meeting to come, attention has firmly turned to the key 1/1 renewal season and what that might mean for Africa’s insurance markets.
From a global perspective, it seems clear that there has been a little more easing of the pressure felt in the past few years when rates rose rapidly and capacity shrank.
This year rating agency Moody’s has changed its outlook on the global reinsurance sector to stable from positive thanks to property pricing declines, while the casualty reserve risk lingers.
Moody’s said: “Pricing for property reinsurance is declining as the supply/demand balance shifts toward reinsurance buyers. Capacity in the traditional market is plentiful and capital inflows to the alternative markets, particularly catastrophe bonds, are also pushing prices lower.
“Nonetheless, risk-adjusted returns in property reinsurance remain attractive and we expect profitability to be strong over the next year. Casualty reinsurance prices continue to rise, though the adequacy of US casualty loss reserves remains a risk, as higher claims from increased litigation and settlement costs have led to significant adverse loss reserve development across the sector.”
Meanwhile, treaty reinsurance—something key to the African insurance space—written in the London company market grew by more than 10% last year, according to the International Underwriting Association (IUA). The sector recorded total premiums written in London of £11.985 billion (US$16.25 billion) in 2024, up from £10.889 billion ($14.76 billion) the previous year.
Treaty premiums now represent 27% of the market total, compared to a 25% share in 2023. This is the highest proportion for treaties recorded since the IUA began publishing company market statistics in 2010.
The figures show that the rise in treaty business offset a slight fall in direct and facultative contracts written by companies in London. The latter totalled £31.789 billion ($43.1 billion) in 2024, dropping 1% from £32.106 billion ($43.5 billion) the year before.
The IUA’s research also measures premium income written in overseas or regional UK offices, but subject to oversight and management by London company market operations. For this ‘controlled business’ direct and facultative placements increased from £4.85 billion ($6.58 billion) to £4.932 billion ($6.69 billion) in 2024, while treaties dropped slightly from £0.587 billion ($795.79 million) to £0.567 billion ($768.68 million).
Flat to down
Meanwhile, analysts at KBW are suggesting property catastrophe pricing is from flat to down. After meeting with reinsurance industry executives in Monte Carlo at the Rendezvous event this year, analysts at KBW have said the indicated range of expectations for property catastrophe reinsurance pricing at the January 2026 renewals is from flat to down 15%.
At the same time, they said retrocessional reinsurance renewals could see rates declining even more, while in the insurance-linked securities (ILS) market investors and fund managers are seen as likely to roll their earnings into 2026, building the alternative capital base further.
“Beyond the reasonable caveat of a few weeks remaining in Hurricane Season 2025, most (re)insurance executives expect property catastrophe excess-of-loss reinsurance rates to decline by about 10% (especially for loss-free higher layers) during the January 1, 2026 reinsurance renewals,” KBW’s analyst team explained.
Reinsurers attending Monte Carlo were suggesting rates would be little changed across the board, as reinsurers strive to maintain market discipline at a time when claims have reduced.
Increasing risks
However, Munich Re has warned that geopolitical risks and natural risks are causing heightened uncertainty. It added that inflation rates and trade tariffs have become more volatile and unpredictable, which means there will be an increasing need to hedge against the resulting risks in the foreseeable future.
Thomas Blunck, member of the board of management at Munich Re, said: “The global reinsurance market is characterised by persistently increasing risks and high demand. In this environment, holistic risk management coupled with reliable and stable capacity are more important than ever. For the January renewals, we continue to expect a market environment that offers attractive business opportunities.
“Overall, there should be a good balance between the capacity on offer and the continued increase in demand. Reinsurance is and will continue to be the decisive protective shield for national economies against major risks.”
However, the group is warning that risk management is increasingly challenged by natural hazard losses, which continue to rise globally. Since 2020, annual insured losses from natural hazards have regularly exceeded $100 billion. In the first half of 2025 alone, they totalled $80 billion. This is the second-highest value of insured losses in a first half since our records began in 1980. Overall, economic losses amounted to $131 billion. In addition to very large natural disasters, the high number of medium-sized loss events increasingly represents a major risk.
These words were echoed by Swiss Re, which said: “Geopolitical tensions, protectionist policies and shifting economics are reshaping global supply chains, raising costs, amplifying uncertainty and increasing the risk of long-term fragmentation. In addition, strikes, riots and civil commotion are increasing around the world. In the last 12 months, more than 70 countries have experienced significant protests.”
According to the Swiss Re Institute, the combination of economic growth, claims inflation and more intense perils has pushed annual insured natural catastrophe losses well above $100 billion in the past few years and increased the possibility of annual insured losses accelerating to $200 billion or even $300 billion in a peak year.
AI opportunities
Artificial intelligence (AI) brings a transformative opportunity for the re/insurance industry, outpacing initial expectations. In a business where the vast majority of information resides in emails, submissions, contracts and claims files, the ability to process and learn from unstructured inputs is no longer a technical aspiration but a competitive requirement.
Gianfranco Lot, chief underwriting officer at P&C reinsurance, said: “In the face of increasing risks, data will become even more important. It’s the basis for risk and accumulation management, and AI will be a game changer. At Swiss Re, we see it as our responsibility to bring together our expertise, technological capabilities, and partnerships—to help turn ambition into reality.”
Munich Re agreed, warning: “The threat posed by cyber risks is also constantly growing. Despite hefty losses worldwide, dependence on critical supply chains and an increasing perception of risk among decision-makers, they still often put off taking out insurance.” It expects the market to continue to grow, with premiums doubling to around $30 billion by 2030.
Favourable reinsurance market
Overall, though, it seems the influx of new capital will be a boost for reinsurance buyers, with Aon reporting that reinsurance capital has reached record levels.
In its Snapshot Guide to the Reinsurance Renewal – September 2025, Aon highlights a continuation in reinsurance buyer momentum at the beginning of the January 1 renewal season.
The report reveals that global reinsurance capital hit a new high of approximately $735 billion at 30 June 2025, driven mainly by retained and redeployed earnings in both the traditional and alternative capital sectors.
Alfonso Valera, CEO of International for Reinsurance Solutions at Aon, said: “Buyers can use the favourable reinsurance market dynamics to seize a strategic advantage. Success in today’s re/insurance market depends on anticipating and responding to change and opportunity using the full spectrum of solutions.”
Within the capital total, alternative capital reached a record $121 billion, with outstanding catastrophe bond volume rising to $54 billion—an almost 20% increase year-over-year. As of August 15, catastrophe bond issuance during 2025 had exceeded $17.3 billion, surpassing the full-year total for 2024 ($17.0 billion).
As part of the alternative capital environment, the report emphasises how sidecars have become an important and growing source of proportional reinsurance capacity by helping insurers to manage claims frequency and volatility. The development of casualty sidecars has marked a significant evolution, further broadening the market’s reach.
Data show that there was also heightened demand for facultative reinsurance, due to its importance as a strategic tool to support insurer growth in an increasingly competitive insurance market.
Finally, Howden Re has suggested that those who combine market insight with technical execution, portfolio diversification and innovative structures will be best placed to succeed in this next phase of the reinsurance cycle.
Hard market softening
Howden Re’s “Who dares wins” report observed that the reinsurance market now faces a period of hard market softening, in which rates, while easing, remain elevated amid structurally higher risk premia.
“Crucially, this shift is occurring from a position of historical pricing strength, leaving ample pockets of profitability for those prepared to innovate and underwrite selectively,” the firm explained.
Howden Re continued: “Carrier profitability has improved under these conditions, with returns broadly exceeding costs of capital. Cedents nevertheless remain more exposed to nat-cat losses, retaining 62% of all modelled nat-cat exposure at 1 January 2025. Nevertheless, the Los Angeles wildfires in January marked the largest single loss borne by reinsurers since 2011, underscoring a tightly balanced market.”
The firm’s report stated that as the hard market enters a softening phase, top-line growth can no longer depend primarily on pricing momentum. Instead, underwriters will need to innovate to sustain profitable expansion.
As Mike van der Straaten, CEO of Antares Global, a provider of insurance and reinsurance capacity, concluded, the balance of power is shifting back towards buyers of reinsurance, with greater competition and gradually returning capacity poised to put downward pressure on rates ahead of the 1 January 2026 renewals.
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