Berenberg’s analysis frames today’s reinsurance market as a managed shift, not chaos. The German bank says brokers are steering an orderly transfer of margins from reinsurers to cedants.
Control of distribution sits heavily with Aon, Guy Carpenter, Gallagher, and Howden—roughly 85% between them.
Berenberg argues that this concentration reduces pricing volatility, unlike in the fragmented broker landscape of the past.
With that clout, brokers have pushed reinsurers toward measured concessions: easing aggregate treaty structures, lowering catastrophe attachment points, but still holding cover to one-in-10-year events.
The quid pro quo? Cedants get softer terms, reinsurers pick up more profitable volumes in other lines. Margins thin, but earnings stay intact.
S&P forecasts reinsurance sector returns on equity sliding from 21% in 2023 to around 12% by 2026. That’s lower, yes, but still comfortably above Berenberg’s 9% cost of capital threshold.
The bank even questions whether 2025 numbers are too conservative, pointing to the absence of major Atlantic hurricanes so far.
Premium growth looks steady, with reinsurance premiums expected to rise 9% by 2026. Claims inflation drives about 5%, exposure growth another 4%.
Capital should expand even faster—up 15%, split between traditional and alternative sources. Berenberg highlights momentum in Latin America, the Caribbean, and Asia, where demand is building.
Balance sheet buffers remain a strength. S&P calculates $110bn in excess capital at the end of 2024, a cushion big enough to absorb one-in-500-year events.
Many reinsurers also padded reserves in the first half of 2025, a signal that underlying profitability is stronger than headline results suggest.
The one nagging concern is US casualty. Around $10bn in reserve charges each year continues to hang over sentiment, keeping liability exposures a sector risk.
Still, Berenberg’s conclusion is upbeat: reinsurers face narrowing margins but not structural decline.
Broker influence, fresh capital, and expanding premiums create stability, with returns set to hold above cost of capital through the transition.
