Laurent Rousseau, CEO of EMEA and Global Capital Solutions at reinsurance broker Guy Carpenter, said recently that the reinsurance industry is “clearly and increasingly in a buyer’s market” and stressed that as returns continue to rise, insurers and reinsurers are looking to grow both organically and through M&A.
Guy Carpenter, the reinsurance broking arm of Marsh McLennan, held its pre-Monte Carlo briefing this afternoon, during which executives from the firm discussed market dynamics ahead of RVS 2025 and the January 2026 renewals.
The briefing included an insightful market overview from Rousseau, who shared his thoughts on the impact of the macroeconomic environment, the P&C reinsurance cycle, and strategies and opportunities the broker sees at play.
“First of all, the reinsurance industry is clearly and increasingly in a buyer’s market. We see an acceleration of the softening trends witnessed over the past two years,” he said. “Second, insurers and reinsurers strategic priority has shifted towards growth. As returns continue to increase, insurers and reinsurers are looking to grow further, both organically and through M&A. Third, given a challenging macro environment, it is a time for the insurance industry to shine and show its value add.”
The shift towards a buyer’s market has been highlighted numerous times in recent weeks, with brokers noting a more favourable environment for cedents at the mid-year renewals when compared with the prior years. Further, a recent reinsurance buyer’s report from Moody’s Ratings suggests that this trend will persist into 2026, with further rate reductions expected by many as terms and conditions broaden.
Digging deeper into the current macro environment, Rousseau noted that it is both complex and volatile.
“The complexity of the moment is what stands out. That is trade wars, ground wars, culture wars, promise and risk around AI and emerging technologies, extreme weather events, supply chain risks, you name it. Navigating that complexity is a challenge of the moment. In uncertain times, there is a tendency to focus on short term and on local issues. Whereas reinsurance is all about diversification over time, the long term, and the world, the global risks universe,” he said.
On the P&C reinsurance cycle, Rousseau explained that it continues the softening evident since 2023, noting that since then, reinsurance capital supply has been growing at a faster pace than demand for coverage.
“In view of this context and the current reinsurance landscape, the question is, how far and how fast the market will soften in the 2026 renewal? This will depend on catastrophe and economic risks through the rest of the year, of course.
“Our current view is that the likeliest scenario is continued softening in the market. In particular, it is likely that price decreases will accelerate, and terms and conditions will broaden, but in an orderly manner. As reinsurers push for growth, now is the time for clients to optimize their reinsurance protection,” said Rousseau.
Adding: “If we look at the supply side, we see traditional reinsurance capital continues to grow at pace, supported by strong underwriting results, retained earnings, and higher investment yields.
“Alternative capital continues to grow steadily, with more capital deployed in broadening lines of business and geographic areas. Financial investors have played an increasingly growing role in the P&C insurance and reinsurance industries, regardless of rate evolution over the past 20 years. This shows that alternative capital has not yet reached its full capacity and will be likely growing.”
In terms of the overall demand for reinsurance, the CEO confirmed that Guy Carpenter is expecting this to increase, mostly to cover frequency risks and earnings volatility.
“However, demand increases at a slower pace than capital supply. The dampening effect on reinsurance demand has been insurers’ plan to increase retentions as a means to fuel their earnings growth. Ceding less premiums to the reinsurance market is a lever to grow bottom line earnings.
“Increased retentions have already translated into increased volatility. This is a normal cost of business we’ve seen in the past cycles, and we should be expecting to see that to continue, requiring insurers to have scale and diversification to absorb risk and increased volatility,” said Rousseau.
He then went on to discuss the third topic, opportunities and strategies, in more detail.
“As demonstrated by both insurers and reinsurers second quarter earnings season, the P&C industry is generating significant returns for their shareholders, while providing very strong financial strength to their respective clients. This is true of both insurers and reinsurers. Therefore, a key question for market participants is how they can keep their successful growth trajectory without deteriorating the quality of their underwriting. Excessive and uncontrolled risk capital expansion is a well-trodden path for our industry over the years,” said Rousseau.
He explained that in the current competitive market environment, Guy Carpenter sees three features as key success factors for companies.
“That first feature is client centricity. To be best positioned for growth with their insurers, reinsurers need to play across the board with proportional shares on client treaties in all classes where they have appetite. To create value, reinsurers must truly share the fortunes of their clients.
“The second lever is superior risk understanding and risk insights. Actionable insights are vital to identify and capitalise on emerging growth opportunities, and allow for a more agile capital deployment across underwriting cycles. Our industry is not immune to the deep technology and AI transformation that is going on, but our industry is still rather slow to treat technology as a paradigm shift opportunity. Insights generated by greater data quantity and quality, and the ability to process business in a smooth and reliable way, will continue to play growing roles. Alternative capital providers coming from financial markets background, bring this nimbleness and ability to act swiftly on data and market signals.
“The third lever is M&A and external growth. The ability to execute on inorganic growth, that has been, over time, a key driver of expansion. We expect continued increase in M&A activity. History shows that as a cycle softens, M&A activity levels increase, ensuring growth and diversification to remain profitable across cycles,” said the CEO.
