$100bn event may not be enough to cause a hard market, say Berenberg analysts

As the reinsurance industry has transitioned into a softening market phase, analysts at Berenberg have indicated that a single $100 billion catastrophe event is unlikely to revert the industry back to a hard market cycle.

A recent report from the firm analysing the 2026 hurricane season indicates that due to ample capacity and catastrophe losses being 30% lower than the average in the first half of 2026, the pressure on reinsurance pricing is likely to continue into the January 2027 renewals.

Analysts also observed that terms and conditions are expected to be the primary area of contention, especially since reinsurers’ share of losses has decreased from 20% to 13%.

As mentioned, analysts have flagged how a single $100 billion wind event would be unlikely to turn the cycle this year.

“In 2022, following Hurricane Ian, among other catastrophes, traditional reinsurance capital declined by c17% yoy or c$100bn. The scarcity of capital and large loss experience resulted in pricing increasing in the subsequent years,” Berenberg explained.

Adding: “Considering the current financial conditions in the reinsurance market, a $100bn hurricane may be insufficient to cause a hard market; it may be barely enough to halt the pricing declines.”

In addition, analysts pinpointed how 2022’s FY global insured catastrophe losses were $150 billion, with Hurricane Ian accounting for $55 billion of the amount, equivalent to 21% of global traditional reinsurance capital.

“Given that H1 2026 insured losses are c30% below their 10-year average level at $46bn, according to Gallagher Re, a single $100bn event (or a series of large events) would not be enough to result in material capital depletion,” Berenberg added.

At the same time, Aon in its estimate pegged total global insured losses from catastrophe events in the first half of 2026 at $47 billion, significantly down on the broker’s $100 billion estimate from H1 2025.

Moreover, broker estimates put FY 2025 insured cat losses at $120 billion, with around $40 billion of that stemming from the January Los Angeles wildfires, while FY 2024 was the peak with global insured losses coming in at $150 billion.

Interestingly, with only one major Atlantic hurricane event forecast by Colorado State University (CSU), this suggests that the likelihood of material losses occurring during the 2026 hurricane season and affecting aggregate pricing dynamics appears to be limited, in Berenberg’s view.

“CSU also expects well-below-average storm activity (relative to the 1991-2020 baseline), with a well-below-average (long-term) probability of a major US hurricane landfall. CSU expects the current moderate El Niño conditions to intensify over the next few months, making the phenomenon the dominant factor for the upcoming hurricane season,” Berenberg said.

Analysts added: “Ultimately, a large hurricane could be unavoidable; however, the winners in our view will be the companies that are well positioned to capitalise on the hard market following the event. This means having the balance sheet to withstand the shock and being able to deploy capital.”

As previously highlighted, Berenberg’s analysts noted that the 2026 Atlantic hurricane season setup is likely to add pressure on pricing and terms and conditions for reinsurers.

“Assuming the 2026 wind season proves to be very benign, as expected, with insured losses well within budgets, then pricing pressure is likely to persist for reinsurers at the January 2027 renewals. The key area of uncertainty is how resilient terms and conditions remain, and whether reinsurers would prefer to offer lower prices in exchange for unchanged terms and conditions at the upcoming renewals,” Berenberg said.