No return to indiscriminate soft-market behaviour in reinsurance: Storr, Antares

Mat Storr, Head of Reinsurance at underwriter Antares Global believes that the market is heading for an “orderly renewal” and he does not foresee any return to “indiscriminate soft-market behaviour” even though capital is abundant.

It’s helpful to get the perspective of traditional reinsurance markets at this time of the year and Antares Global, which operates as the international arm of the Qatar Insurance Group (QIC), is reliable in always providing its perspective.

Buyers market conditions are expected to persist for some though and Storr’s commentary acknowledges there will be pressure directed at pricing in the upcoming end-of-year reinsurance renewal negotiations.

Storr explained, “I expect an orderly renewal rather than a dramatic shift in pricing however buyers with well-performing portfolios may continue to secure more favourable outcomes. Reinsurers remain disciplined and are far more focused on portfolio quality than simply deploying capital.”

“We are likely to see a more disciplined approach than in previous soft markets because the industry has learnt some expensive lessons over the past decade. Capital is available, but it is being deployed with much greater scrutiny around attachment points, exposure quality, data, governance and long-term profitability.

“Cedants that demonstrate strong underwriting discipline, transparent data and consistent performance should continue to receive favourable support. Those relying on optimistic assumptions, weaker governance or insufficient exposure controls may find reinsurers becoming increasingly selective.

“Capacity is returning, and pricing pressure is evident across multiple classes but discipline remains firmly embedded. Success over the next few years will be defined less by who grows the fastest and more by who underwrites consistently, embraces transparency, invests in data and governance, and builds enduring partnerships with brokers, clients and reinsurers.

“Those fundamentals have always mattered, but in today’s market they matter more than ever.”

Well-performing and structured reinsurance programmes are continuing to see pricing pressure across property, marine & specialty and casualty lines, with increased capacity available and reinsurer appetites improved.

“Cedants with strong data and clean loss experience are achieving better outcomes on both price and structure,” Storr said.

But he clarified that, “However, this is not a return to indiscriminate soft-market behaviour. Reinsurers have become much more sophisticated in identifying where they are comfortable reducing rates and where they continue to demand adequate risk-adjusted returns. Pricing is becoming much more differentiated by portfolio quality, loss performance, attachment point, exposure management and the credibility of the data being presented. Following recent loss activity within the Marine Specialty market in particular, differentiation is key between those accounts that have performed well and those that have not.

“I expect 2027 to be characterised by relative stability if loss activity remains within current expectations. But the market is finely balanced. Capital is available, yet there is little appetite to repeat historical pricing mistakes. A meaningful global catastrophe year, further deterioration in ongoing losses and therefore reinsurer returns or a change in investor appetite could quickly alter the tone of the market.”

Storr believes that reinsurance capital providers that cultivate long-term, meaningful partnerships with clients, rather than a purely transactional relationship, are likely to be best positioned.