Demand for retro capacity to rise, rates to soften, retentions to be pressured: Guy Carpenter

Reinsurance broker Guy Carpenter is anticipating rising demand for capacity across reinsurance and retrocession markets at the January renewals, but against a backdrop of softening where they will be looking for markets to offer more to clients, through improved pricing and terms.

“Reinsurers are expected to recalibrate to adapt to the changing risk landscape and market conditions, balancing discipline with pragmatism.

“There is a sustained appetite for growth, and we anticipate those reinsurers who are willing to offer flexibility, product differentiation and innovation are most likely to prevail,” James Boyce, CEO of Global Specialties at Guy Carpenter explained today.

In non-marine retrocession so far this year, prices ganerally have followed January downwards.

GC explained that, “Retentions remain a key strategic consideration for clients and markets, and are likely to come under some pressure at January 1, 2026, along with price and coverage.”

Adding, “Appetite to buy aggregate cover continues to grow as coverage broadens, especially with respect to secondary perils. Some new capacity has emerged, mostly from ILS carriers, but also from rated carriers.”

Ross Nottingham, Managing Director of Non-Marine Specialties, Guy Carpenter further explained, “Guy Carpenter expects that there will continue to be a more-than-ample supply of retro capacity to meet the growing demand we see coming.”

Richard Morgan, Head of Non-Marine Specialties, Guy Carpenter added, “There is a growing trend to support clients crossclass. The client portfolio as a whole—across specialty, casualty and property—is performing very well, so retro and reinsurance markets will look favorably on that cross-class element.”

Overall, Guy Carpenter sees the non-marine retrocession space as healthy, with strong fundamentals, but capital expected to build further from both established and new market entrants, as has been seen across reinsurance.

They expect markets to balance discipline with pragmatism, as the broker clearly anticipates a buyer favourable sector, where capital providers will be expected to give more back to the buyer, in its view.