Kevin J. O’Donnell, President and Chief Executive Officer of global property and casualty reinsurer, RenaissanceRe (RenRe), said today that he is optimistic the January 1 renewals will be a pricing shift in the property catastrophe space, with terms and conditions (T&Cs) expected to hold as reinsurer discipline persists.
During a recently held earnings call, CEO O’Donnell and David Marra, Executive Vice President and Group Chief Underwriting Officer, provided some insightful commentary on the firm’s outlook for property cat heading into the key 1.1 renewal season.
“We begin with a very profitable property cat book. While we expect some market reductions, return levels should remain very attractive. I expect the market to remain disciplined with reinsurers holding on retentions and terms and conditions. Consequently, in 2026, property catastrophe rates should remain strong and should produce returns significantly in excess of our cost of capital,” said the CEO.
Marra noted that over the last three years, RenRe has grown its property cat portfolio by around 60% in “one of the most attractive rate environments in history.”
The business has been very profitable for RenRe, with Marra highlighting an average margin of 50% over the three year period, in spite of significant catastrophe losses for the industry. This year, Marra emphasised, the reinsurer grew US property cat, the firm’s highest margin business, by a robust 13%.
“We did this by selecting the most attractive risks in areas like Florida, California, and loss impacted nationwide accounts, and securing these lines with our strong access to business. As a result, we captured more than our market share of the $15 billion in new demand this year,” he explained.
Looking ahead to 2026, Marra echoed O’Donnell’s comments that RenRe expects continued growth in demand, although warned that supply from sellers will likely outpace this, which will pressure rates.
The market, and RenRe, is anticipating property cat rate reductions of around 10% overall at 1.1 2026, but Marra reminded listeners that as was the case this year, rate reductions will not be uniform across all accounts.
“We do not expect reinsurers to sell new bottom layers below expected cost, and we do not expect clients to pay high rates for these layers,” said Marra. “Therefore, we expect new demand to be mostly at the top-end of programs, and most of the competition to be focused on rate rather than terms and conditions and retentions, which will help insulate our bottom line profitability if rates decline.”
Later in the call, O’Donnell voiced a similar opinion, saying: “I am going into this renewal with optimism that it’s going to be a pricing shift, not a terms and conditions shift, which I think is likely to be the case. Sometimes terms and conditions changing have material impact on economics and is less transparent to see in the portfolio. I don’t think that’s what we’re going to see this 1.1.
“So, from my perspective, I think it’ll be a relatively transparent shift in economics, and we think it’s in the ballpark of a 10% rate reduction. So, there are numerous other things we’ll monitor. We’ve got great underwriting capabilities; we have great tools to see changes in the portfolio. So, if we do see other shifts in economics that are less transparent than price, we will react accordingly, but it’s not my expectation.”
Ultimately, O’Donnell expects property cat business to still be well rated in 2026, just perhaps less so than it was in 2025.
“So, the guidance we’re trying to give, or the directional information we’re trying to give is, fees look strong, investments look strong, and the underwriting in ‘26 is largely going to look like the underwriting in ’25,” he said.
About the Author
