SpEp The State of (Re)insurance 2026

0:02I'm Mark Gagan and welcome to a special documentary episode of the Voice of Insurance Podcast produced in association with Stevens Rickard. This is the fifth episode of its kind. The first saw a historic, chaotic, dramatic hard market renewal unfold. At the next, stability and a return to orderliness was craved and was granted. The year after that, animal spirits started to be talked of in hushed tones. Last year, the industry had its mojo well and truly back, and the real questions were philosophical. Is it possible for everyone to grow profitably without changing the nature of the market? Is it better to buy or build?

0:41Should excess capital be returned or deployed in M &A? This year, the answer to most of these questions had already arrived, and it arrived faster than almost anybody expected. Twelve months ago, I stood in these same streets and heard reinsurers tell me, almost to a person, that they were happy to give up a little rate in exchange for growth. Well, they gave up more than a little. The renewal at 1-1-26 delivered what many have called two years of softening compressed into one. Today, capital is even more abundant. Profits are still real, but yet, for the first time in a while, I heard the word fragile used more than once.

1:20And not always by the people you'd expect. So, join me as I wander the streets, dodge the supercars, cross the squares and elbow my way through the crowded bars and lobbies of Monte Carlo to meet a representative cross-section of the reinsurance buying and selling public and find out what's really happening in the state of reinsurance as we look towards 1-1-27. Before we get into the room-by-room detail, it's worth looking at the big picture through the eyes of one of the people whose job it is to analyse the whole market rather than any single deal. Over to David Flandreau, Head of Industry Analysis and Strategic Advisory at Howden Re.

1:56If you look more broadly, if you zoom out, you can see that country risk premia are increasing. Bond yields are increasing. Inflation is increasing. The world is actually a very risky place. 2025 was sadly the year of the most combat deaths since 1994. We've got two hot wars happening. The capital markets are quite volatile, but if you look over here on this other side of the page, reinsurance pricing is falling. It's a paradox. Plenty to unpick here. We know reinsurance often operates in a capital bubble of its own making, but what David has just said is pretty remarkable. Every other form of capital is getting more expensive, while reinsurance is getting cheaper.

2:36This has to make buyers pretty happy. Buying more and better quality reinsurance surely has to be good economics for students today. But will it pan out that way? Most of the answers are coming up in the next hour. After our big opener, it's time to get into detail. As usual, I opened up almost every interview this week by asking how people would characterise the state of the market today. Let's run through some of the most representative opening remarks, and then take stock. Since most people agree it's a buyer's market, we'll start with Alessa Quain, CEO of International Markets at Sompo. From a buyer's perspective, I would say that the market, as we see both in the reinsurance and the insurance side of it, we see a softening in the market.

3:15I think people are still quite focused on terms and conditions. We don't see a lot of movement there. It's really sort of a price at this point in time, and it varies certainly by line of business. So I wouldn't say that it's a seller's market or a buyer's market. I think there's a pretty balanced demand, if you will. I think it's a market where there's ample capacity right now, and that's driving some of what we see from a rate perspective. But I do think that buyers like myself are focused on the kind of capacity that's there and making sure that it's part of what I would call longer term relationship as we go through the market cycle, the ebbs and flows of the market.

3:51Of course, only the best buyers would never describe the market as a buyer's market. But Alessa is painting a picture of plenty of capacity and choice for buyers, albeit with some terms and conditions remaining firm. Over to Alex Maloney, CEO of Lancashire Insurance. It's clearly healthy. There's clearly a lot of capital that's been generating in the last few years. So I'd say that's a positive. I think we all believe there's going to be more competition that we see the 1st of January renewals but on a relative basis I still think most products are in a really good space. So I think people should be cautiously optimistic as we go into 2027 and let's not get too depressed about it.

4:29You know the industry's had a number of really good years and we've built some really good returns for our shareholders and prior to that it was difficult. So I'm still on the positive end of the Monte Carlo messaging. So in relative terms Conditions are still pretty good for a business like Lancashire. Duncan Dale, CEO of Lloyd's Underwriter, Dale Underwriting Partners, sees more of a mixed bag. Changes a bit by line of reinsurance. Property, disappointing. Disappointing level of correction that we've seen in the last six months or so. Casualty, different market completely. Still struggling to keep ahead of the loss trends in pricing, but improving.

5:07Marine and specialty obviously picks up some challenges. And that has been softening, but reasons why that will stop, I think, given some of the exposures going through that market. Jill Beggs, CEO of reinsurance at Everest, used a different word instead of softening. We see the market moving from a period of correction to normalization. And we think that's actually a positive thing. There's a lot of capital in the marketplace, and that's because it's a healthy market. We're watching closely, is the market moving in the direction with so much capacity, pricing changing? At some point, does it tip into a place where rates are inadequate and pricing terms and conditions are not as healthy as they are today?

5:52So the word was normalisation, i.e. a return to what we're used to, and that's a competitive market. And there's another appearance of the word healthy. Jörg Brunetsky, Chief Underwriting Officer of MSRe, is the first reinsurer to mention the increased optionality available to buyers. Well, I would say it's a market which is abundant in capacity. And we're going into Monte Carlo, where it has been the hurricane season. Normally, we sit here sometimes looking with a hurricane pointing at Florida or somewhere. And this time, there's nothing. So it's certainly a market where clients have choice. And we're very aware of the fact that clients have choice.

6:30So capital is available. So I say while capital is available, it's maybe not a question about availability, but permanence of capital as well. If lots of capital is around, buyers get to pick the kind that best suits them. Martin Burke, chief underwriting officer of MS Amlin, sees a market that has reached a point at which decisions need to be made. I think there's definitely choice there but again when you go back to the insurance cycle and the insurance market I think that's also driving a lot more demand in the sense of there being need to buy more cover so when people are thinking about growth in their reinsurance portfolios there's definitely an element of just organic growth coming through and then there might be sort of inorganic growth in new areas such as data centers AI related business but there's a combination of both of those things is certainly, I think, outweighed by the supply of reinsurance capital, and that's driving this store position in the market at the moment.

7:32This episode is supported by Stevens Rickard. Stevens Rickard is a specialist executive search and advisory firm dedicated to the global insurance, reinsurance, and alternatives markets. Founded in 2009 with offices in London, Miami, and Zurich, the firm advises clients across the international market on senior leadership appointments, succession, assessment and talent strategy. The team combines deep sector knowledge and global market intelligence with a rigorous research-led approach to search and assessment. Its work spans board, c-suite and senior technical appointments alongside psychometric assessment, diversity analysis and broader talent advisory.

8:14Central to the firm's approach is a commitment to looking beyond the obvious, understanding the market in depth, assessing talent objectively and building long-term relationships with both clients and candidates. To find out more, visit stephensrickard.com. So, choice for the buyer coming up again, and a realisation that for reinsurers there might be another choice to be made, whether or not to keep growing. Paul Brand, CEO of Convex, has a typically idiosyncratic way of describing the market of today? Well, it's classic curious egg, isn't it? It's good in parts and bad in other parts. I think when we look at it from a convex perspective, definitely seen some price reductions on certain accounts.

8:57But we're also seeing price increases on other accounts. And through the piece, we're actually quite happy with where the market is. Would you describe that as being a fairly rational market? So I don't think the market is ever rational.

9:12I'm But given the fact that we've not seen that many losses and returns are good, am I surprised that you're starting to see a softening? No, absolutely not. The cycle's really driven by recency as much as our technical view and disciplined underwriting and other things. A typically frank exchange with Paul. But of course, it isn't only the underwriters who have a say. The brokers see the whole picture. Richard Dudley, Group Chief Broking Officer at BMS, gives the plainest explanation so far. There is a very well-established scene out there, which is that we have a slight imbalance in supply and demand, a lot of supplier capital and perhaps not such an increase in demand, so that's not new news.

9:53You will have heard that from many others. I think for us, it's fairly clear in most lines of business, clients should expect to get the same thing for less money in terms of the buying community. But what we're trying to get them to think about is how to think a little more smartly about what it is they're actually buying. So, it's all about what buyers should do with their increased buying power. Ed Hochberg, who runs Structured Solutions for Marsh Re, agrees on the diagnosis and the likely outcome for clients, but adds a warning about what it does to everyone competing for the same business.

10:23The way I would characterize it, and this won't be a big surprise, is that it's fairly awash with capacity. Capital is plentiful. It's quite competitive. And a lot of the participants, they're looking at how to remain and continue to be relevant in a very changing market where it can be very difficult to differentiate themselves. And I think the market will generally be able to do that and looking at products that will help seed in a way that we haven't seen quite as much since the big reset in 2023. So could we be looking at a 1-1-27 reset of the 1-1-23 reset, but in favour of buyers? Finally, Rachel Turk, Lloyd's chief of performance and strategy, used an interesting choice of adjective when describing the state of the market.

11:11I would say it's reinsurance. I think it's similar insurance, actually, both of the markets. I characterize them as a bit fragile. So whilst we look and we're going softening and rates are declining, I think reinsurance is holding slightly better than insurance, not across the board, but in some places. But actually, I think we are still fragile enough that major events could change the pricing dynamic. Why do you say fragile when all those broker reports are saying record capital, excess capital coming out of our ears? So surely our balance sheets have never been stronger. our capital strength has never been stronger where's the fragility so i completely agree with you but then if you look at a longer term return on capital so we've got four years of really good return on capital and six years of very poor return on capital we disclosed at the lloyd's half-year results the 10-year return on capital is 9.9 that's not brilliant i mean we have a long term target of it being 12 so yes there's four years it's been great but i just look at it and go we still need to have a few more years that are similar in terms of return profile and capital returns in order to start buying us a way out of the poor years that are still creating a drag, I think, to overall.

12:16So it's almost in that old fashioned sense of when people used to almost look at their relationship with their reinsurer and call it a bank, you'd say, we haven't banked enough yet. We're still overdrawn. Pretty much. That's why I do fragility and saying, yes, we've had four years that have been great, but who knows what the wind's going to do. But if you have an active Nat Cat, a very active Nat Cat season, I think all bets are off. In Rachel's long-term view, fragile doesn't mean how much capital you have today. It really means your ability to attract and retain that capital over long periods because you're consistently producing the right sort of returns.

12:49If you aren't, then you may find out just how fragile you really are at the point when you most need support. So that's the opener. Lots of different voices and lots of different words for what is, on paper, the same set of numbers, near-record capital and a sector still producing strong returns. Let's recap some of those keywords. Healthy. Normalising. Abundant and full of choice. A stall. A curate's egg. A wash. Fragile. On the face of it, the numbers seem to agree with each other far more than the people describing them do. But actually everyone agrees on the core issue. The market will be softer and reinsurers will have to do more for buyers at 1-1.

13:30And as a consequence, buyers have lots of choice. We'll be looking at that in much more detail later. But before we move on, I wanted to gauge a sense of the momentum that the market had already built up. This time last year, reinsurers were happy to grow into a market that they expected to soften a little. But we now know that the market softened faster than expected, so wasn't that a negative surprise? Markets don't like unpleasant surprises and often react, So my question was whether there'd been some kind of reaction to the bad news following the 1-1-26 outcome. Alex Maloney at Lancashire admits the pace caught the market out.

14:07I definitely think we were surprised in the pace of change. We didn't expect that. And I don't think we're alone in that view. I don't think there's any real reaction to it. And there's the fact that humans still want our market. You just have to be careful that people don't start losing their nerve too early. So in fairness to our broker colleagues and partners, they can only achieve what the underwriting community will allow them to. But yeah, I have to agree. I think the market softened quicker than we expected. But it's very hard to predict. Maloney also came up with one of the best lines of the week on why better data doesn't always mean better discipline.

14:43The bit that always worries me is, do the humans follow the data? So yes, we can have better data, we can have better technology. I have the data to lose weight mark, but I don't always do that. So I just get worried that even with all the changes to our world, it's still a market run by humans and does human behaviour follow other cycles? Was that the reinsurance equivalent of St Augustine's famous prayer? Lord, make me chaste, but not yet. So yes, there was a negative surprise, but there's still margin to be had and nerves have to be held. But the worry is that humans might get carried away by emotion, and perhaps some of the recency bias that Paul Brand mentioned earlier, when price adequacy is challenged.

15:27Jörg Brunetsky at MS Re takes a more philosophical view of that same surprise. Degrees of surprises, we can call it. I mean, was everyone expecting the market to soften? Yeah, the degree is always the market does what the market does. I cannot influence this. So in reaction to what the market does, the question is, what do you do with this? has this just taken out excess margin and brings it down to the technical adequate level? So the reaction to a surprise is important, but even more so is knowing where you are in relation to your own return expectations. Ed Hochberg of Marsh Re has watched plenty of soft markets from the broking side of the table and says this one feels calmer than most.

16:09You know, it's funny, no, I haven't really seen the negative reaction. I've seen it more from the standpoint of kind of like a practicality. A lot of the market participants I've been around, they've seen this movie before. It isn't particularly surprising to them. And they've sort of met the situation with, I don't want to say a quiet resignation, but more of being practical about it and thinking about, okay, what's the best way for us to transact in an environment that looks like this? We can't really change the macro picture, but how do we behave in it? That's something that we can control.

16:43And I think there are a lot of markets that said, yeah, we know that prices are down, but we're open for business and we're going to look to solve clients' problems. For Rachel Turk at Lloyds, the absence of a reaction is slightly worrying. Usually when you have a negative shock, you have a reaction. But have you seen a reaction? Not hugely, if I'm totally honest. I think there's a lot of talk about rates and disillusion with how fast rates are probably declining. Not seeing much in the way of action to turn it around. And Duncan Dale isn't convinced that the market ever really finds the flaw in the way that theory would suggest it should.

17:18I'd question whether we've learned all those lessons, actually. I remember years ago we felt there would always be a flaw and that the introduction of modelling and the actuarial science would provide a pricing flaw, but I don't think we saw that. So it turned out to be a flaw spelled F-L-A-W-R rather than F-L-O-O-R. and often it's company motivation of whether they want to continue growing or how they want to grow rather than individual underwriters to our mind who are pressured into doing things that they perhaps are logical in the class of business that they're operating in. Perhaps an echo of Alex Maloney's earlier fear there.

17:57If rate keeps falling and nobody's slamming on the brakes, isn't it easy for all that accumulated momentum to crash through the floor? So let's look at something that many are hoping will help us avoid that flaw. We all agree that supply is up and reinsurance is becoming better value. We all also know that when something becomes more reasonably priced, that makes it easier for us to buy more of it, and latent demand is stimulated. There's also plenty of genuinely new insurance business out there looking for support. But as ever, the big question is whether enough of this demand will rise up to temper the competitive effects of excess supply.

18:34Over to David Flandreau to kick this one off. In terms of exposure, yes, absolutely. In terms of absolute level of premium, I think that premiums will go up in reinsurance when we do the measurement at the end of the year. But they won't go up as much as they did for the last couple of years because we're not going to have that pricing tailwind. So more risk, and in absolute terms, more premium, should be transferred to reinsurers. Renault Guidae of AXA XL definitely thinks demand should hold up. What I see is that clients, and when I say clients, it's not intangible as an institution. It's actually people, very seasoned, reinsurance buyers working together with their teams, with their reinsurance committees, with the C-suite, with their board of directors.

19:19All this ecosystem, they do see that the world has become more risky, more uncertain. And when you see that, what you want to do is to buy more protection and to get more guarantees from reinsurers. So if anything, the trend is actually more demand for cover from reinsurers. Renaud, with a major echo of David Flandreau's big opening statement right at the start of this podcast. Ed Hochberg at Marshree says that this dynamic is already showing up on his desk. Better Value Reinsurance is generating its own demand. It depends whom you ask. I think there will be some increase in demand, in some respects created by the increase in supply, because even when we had the Great Reset, retention levels have still stayed relatively high in some places.

20:06And I think there are students who will be looking at solutions, not just banking the savings, but thinking about how to recycle those savings into coverages that help manage their volatility better. Some second, third event covers other types of sideways protections that have been somewhat lacking since 2023. So do you think net more risk is going to be transferred to reinsurers by the time this is all over? I do think so. I think we will see net net more risk transferred to reinsurers. Yes, I do. Time to look at some genuinely new demand. New risks that really didn't exist in either the insurance or the reinsurance conversation until just a few years ago.

20:48Over to James Slaughter, Executive Chair of Underwriting at Apollo. Reinsurance is an absolute enabler for the growth in some of our more creative businesses like autonomous vehicles, for example. Without reinsurance, it's going to be very difficult to service a rapidly growing space. So Uber just announced that they're running in London. Waymo will not be far behind. We're obviously well known for being a participant in that space. Our reinsurance partners there genuinely are helping us build market. We often forget that when a genuinely pioneering underwriter wants to do something that has never been insured before, trusted reinsurers are absolutely the first port of call.

21:28Jill Beggs at Everest sees new demand showing up in greener and more geographically diverse places too. I think growth is going to be challenged, but I don't think that it's a pessimistic situation at all. There's tremendous opportunity. And there's opportunity in areas that we found around renewable energy, for example, parametrics. So there are solutions that we're bringing to our clients and opportunities for growth. Overall, the top line probably comes down because of rate decreases and some areas that we're pulling back in. But we've written business with new clients. We're writing brand new types of treaties together with our clients, putting different lines of business together to find solutions to put them on their front foot.

22:06So we always try to find the yes. And in that process, we are finding opportunities to grow. Parametric solutions and green energy getting a mention there. Although in Jill's case, the top line might in fact end up dipping. Then there's the new demand that we're perhaps more familiar with. That's coming out of the current tech boom, data centers, AI liability and cyber. Lara Mowry, chief commercial officer at Gallagher E, just launched a whole new practice group to treat all three. I really don't think it's about pricing was down X. I really think it's about successfully deploying capital, successfully solving problems, coming up with unique and bespoke solutions, digging into more of those broader issues that are out there.

22:51I love the idea that what we do is solve the world's problems in terms of making sure the right protections are in place in order to make things happen. Gallagher Reed just launched our digital risk practice group last week. And really, the idea behind that is to take things that have been happening throughout the company, emerging topics like data centers, like AI liability, and put them under one umbrella so that we can leverage things like the technology we've been using within our cyber practice, very growing and evolving class of business. And we can apply those things to things like data centers and solving those issues.

23:39We're absolutely going to continue to see that evolve. We're going to continue to see demand. We're going to have the friction between now people starting to push back on, I don't want a data center built by me, along with the fact that the demand for AI computing power is only going up. It's not going down. So that's going to continue to drive demand for a way to get that computing power. We as an industry, this is a perfect example of an evolving problem we're going to step in and provide solutions to. Great to hear some optimism here. The sheer scale of capacity required is staggering. Back to Lara.

24:20All of a sudden, the discussion was, I have to put together 5 billion of capacity, and then it crept to 10 billion of capacity. And you see people trying to figure out how you're going to get these huge towers pulled together. But there have been data centers out there for a long time. And there's hundreds of data centers worldwide that are already sitting in insurers' portfolios. So there are all kinds of issues around the discussions we're having for data centers now that we can look at the existing infrastructure and also identify solutions for that infrastructure and the aggregation of the risks being put together, as well as just the single location tower of needing$10 billion.

25:03So this demand is real. Put a cluster of a few$10 billion data centres together, and soon you're looking at some pretty challenging accumulations. It's clear that just because the market is soft and softening, that the world doesn't stop turning, and new opportunities don't stop being created. But now it's time to talk about rate adequacy, that pricing flaw that many have already been mentioning. What's everyone's view of how much further we have to go before we start to hit it? Well, everyone's book is different, as are their capital return hurdles. So let's go back to David Flandreau for the aggregate view.

25:38One of the first things that we see when we look at the reinsurance market is that economic value-added spread is close to even. And this is actually the return on invested capital minus the weighted average cost of capital. You have to measure it this way. No good using return on capital employed. No good doing the equity spread. You've got to do the EVA spread. And when you look at that, we're close to even. What does that mean? It just means that actually it's correlated with price. And over time, sometimes reinsurers generate more economic value than it costs them to run their business, sometimes a little less.

26:11But it's really important to note that we're in the middle of the pricing cycle. And that seems to correlate with an economic value added spread that's about even. So it's all about Eva. Of course, the nature of economic value add means it can actually be negative, while reinsurers are still looking perfectly profitable on all their other metrics. By the way, this is a timely reminder that you really do need to read Howden Re and all the other excellent brokers' reports that have come out around these dates. They're a great companion to this podcast, and I'll add all the relevant links to the podcast notes.

26:45So, given what David has just said, how much further can pricing fall before that spread turns properly negative and the market starts bumping the floor? Reinsurers are generally still hitting their KPIs. Reinsurers are well capitalized. Reinsurers have just come off of three years where they've had in many different ways, whether you're looking at combined ratio, ROE, economic value, they've had very strong performance. So reinsurers are, they should be quite happy. But looking forward, I think that it's fair to say that there is some apprehension there, and rightly so, because we're getting to that point where economic value creation is close to neutral.

27:20There's no doubt about it. When I say that, I'm talking about an average of 32 carriers that I'm measuring. So I would say the median is close to neutral. And there's obviously a big spread around that. Reinsurers can still create positive economic value in this market, and who dares wins. Simon Bird, group executive underwriter at Brit, suggests that we might have already gone rather further than that. No, we're going beyond rate adequacy in certain areas. Downwards. Yes. Between us, we had a nice expression a year or two ago bumping along the bottom. Certainly was. It was the title of a podcast that I did with you.

27:52Now we are delving below the ocean floor, I suppose. Exploring the seller. Yes. But certainly, you look at open market property, be it US or international, I mean, that has weakened dramatically in the last couple of years. That's not to say that There isn't margin, but you've got to look closely now. Cyber, constantly under pressure. It seems to work, but there are definitely segments, I think, particularly in the US market, where it'd be better to step back. It's just too competitive. To Simon Bird's open market property in cyber, Scott Egan, CEO of Serious Point, is ready to add another class where margin is hard to find.

28:32I think there is still money to be made and the market conditions are OK. but it's not a blanket answer under the headline of reinsurance. There are always pockets where rate needs carried. I would argue aviation is a great example of that, both on the insurance and in reinsurance side, where for me the market is underpriced. So I've been pretty public about that. So listen, horses for courses, but let's not all be miserable. There's money to be made. So the overall aggregate positive balance masks pockets of inadequacy here and there, rather echoing Paul Brand's image of the curate's egg. Here's Jill Beggs of Everest, who's holding a firm line.

29:36So it's really clear that some walk-away lines are already being crossed. Jörg Brunetsky has his own name for the kind of risks that can make him doubt whether today's rates are truly adequate. Most of the time we get caught up by what I call, it's not a black swan event, it's a grey swan event. We kind of know it, but we tend to ignore it. Like my wildfire example is, yes, we know wildfires can happen. Did we actually think about what's the likelihood of having this as a major impact from an economic loss perspective or in short loss perspective at the high? But this season focuses the minds maybe to do something about it, that the wildfires stopped at the outskirts of Bordeaux was just by chance.

30:19So what if it goes in? So realistically, we probably as an industry, if we do soul searching, have we priced for this? A fair underwriting point. If Grace One risks really haven't been priced in, chasing quarterly numbers looks like the wrong strategy. Renaud Guidae thinks the whole industry would be better served by taking a longer term view. We are here for the long term. We are here basically to be the last people standing when everything else falls apart, to be the last backstop, which is the ultimate enabler of innovation and progress in society. So we need to take the long view. So, you know, commenting on the vagaries of price evolution quarter over quarter, year over year, it will ebb and flow.

30:57and it would be just like focusing too much on the daily weather forecast to think about property cat, which wouldn't be the right way to do it. It's nice to hear someone trying to be more philosophical and to put everything into a much broader context. James Slaughter at Apollo has a more immediate worry about whether discipline actually holds at the coalface, now that everybody has a computer that will confidently tell them the answer and perhaps the answer they want to hear. Everyone will talk about AI data and all that. That's great, but actually how it's being used, what we're seeing in some of the markets suggests people are either ignoring the facts and the data that's presented to them or that they found some magical ai tool that allows them to write below adequacy which is possible i mean if you ask claude co-pilot and chat gpt the same question you'll get three different answers we know that for sure but i think what i would hope for and my aspirations for the market and Lloyd's particularly is that the proliferation of data tools and technology allows CUOs and underwriters to see spot trends that we probably weren't seeing before to make decisions that are more risk appropriate.

32:07And so whilst we will still always have cycles, I would expect, and we have cautiously seen market behavior that supports this, is that the reactions will be faster. So we'll come off quicker, but we should spot the trend when it gets sub-adequate and we should react more quickly. And I would like to think that it's difficult for a CEO to sit there with all of that data in front of them and not reverse trend when we spot we've gone a little bit too far and maybe need to correct and adjust our portfolios. Really interesting thoughts from James, echoing one of the fears that Alex Maloney voiced earlier on.

32:45This also perhaps explains why the market softened so much faster than many expected. The only thing that is certain is that now that AI is with us in our underwriting decision-making processes, this is a question that's now going to run and run. But of course, the market that always generates the most argument by far is casualty in general, and US casualty in particular. David Flandreau has been quite vocal on this question for a while now. Howden Rhee are on the record for the last three years in a fairly contrarian sense, being, I would say, relatively pro-casualty. And we came out and said this quite publicly three years ago.

33:21I actually had a very smart casualty reinsurance CEO tell me that, no, Flandro, you weren't that contrarian. Everybody just isn't as loud as you. But the truth is, our thesis for the last three years, even as reserves have been strengthening on a calendar year basis, is that you can make money in casualty if you know what you're doing. You don't want to jump in with both feet blindly. But in fact, my operating thesis has kind of been, and I know that there will be those who've been affected by megatorts and social inflation and litigation funding and everything else who will shake their heads at me.

33:50But my view, if you look at, for example, the other liability occurrence line in the U.S., when we look at that line in the 2030s and we look back on the 2020s, I don't think that everyone will have lost money. I think these will be some good accident years. I say that because pricing has been going up to record levels. First-year percentage IBNRs have been going up in U.S. general liability, and they reached a record in 2025. That's not to say that people aren't losing money in casualty, but people are making money in casualty. And we think that it merits consideration as a class, and that includes U.S.

34:23casualty. Clemens Jungstoffel at Hanoveri strikes a more cautious note. Our view of the market generally has not materially changed. I mean, social inflation, the legal environment is still a major topic in US casualty business. Let's not fool ourselves. It does drive claims costs through litigation activity that has not fundamentally changed. It is, I think, fair to say that recent rate developments and also the limit management, et cetera, has been encouraging. So the question is, those pricing developments, etc., do they keep up with future loss trends? So that's, I think, the ultimate questions.

35:07Therefore, we think there is a need for a rate development at least in line with loss cost trends. And the deployment of limits needs to stay disciplined to avoid volatility from single large verdicts that we still see. For me, the question is, can you address a topic that is so systemic in that sense with that litigation environment by way of managing rates, prices and limits, etc.? So that's the ultimate question. So from today's point of view, it looks like discipline is mostly holding. And our long-term partnership here, also in this space, once again, show a lot of value for both us and our partners.

35:50However, in case the market dynamics should change negatively, we would certainly also start managing the cycle here. James Slaughter thinks that discipline is holding for now. We're having the same debate about casualty, but it's much, much more nuanced around the US legal system and the implications of social inflation or whatever title we might give those factors. So it looks on paper technically that it's holding its head above water just on a technical pricing basis. I think there are socio-political influences that are very, very difficult to understand. And so there is rightly quite a lot of caution around casualty, particularly with auto exposure, but GL as well.

36:38And we're a large writer of that, Lloyds. We're one of the larger writers of Excess Casualty. book. We repositioned our book two years ago very significantly. We're much happier with the rate we're getting where we play. I would say adequacy is holding flat. The question of where on that adequacy index you are, I think, is still to be determined. I think if we were to see rates start to slow, I would be very nervous that casualty isn't going to bottle up some pain for the future years. Renaud Guida is more sceptical than most about calling casualty in any way out of the woods. I wouldn't say that by itself casualty has become more attractive.

37:16You have lots of skeletons in the cupboard, lots of uncertainties, lots of risks which are really overlooked and sometimes even ignored. So there's still a lot of work to be done for casualty to be underwritten on a healthy and sound basis. So some students are really doing their homework, but not all of them, which is why the market is differentiating. So I wouldn't say that casualty is out of the woods yet. Ed Hochberg reckons the sheer divergence of opinion on casualty is itself telling you something about the market. I think that casualty is going to be an interesting space to watch because this is a place where you never quite know where you are.

37:55If you get 10 sets of actuaries looking at a set of numbers, you will come up with oftentimes 10 different answers. And so it can be quite difficult to even know what your starting point is. and I think there's a wide range of opinions on the casualty market right now and I have talked to some markets who have looked at their portfolios and they're not particularly excited by it and I have talked to others who are like yeah we think that this is good that we're making really good money yeah there's pockets there's social inflation there's all those things but the rate trend has been good and we're keeping up with trend, but nobody knows for sure.

38:33And so it makes it quite an interesting market. In a market that can't agree on what's healthy and what's not, Hochberg sees the possibility for a bit of switching around at 1-1. Either that or a kind of stalemate. When you have a broad divergence of opinion about the same thing, what kind of a market does that tend to make? I think it almost a little bit of an inertia sort of sets in. And I think people like, well, we're not really sure. Well, Renew is expiring. There could be some churn. There could be some churn within panels where some markets say, we don't see it. We can't support this seating commission.

39:07And others say, oh yeah, we can. It's fine. Who knows who's right? With so much uncertainty, I think it's wise to let a well-seasoned underwriter with a long casualty treaty pedigree have the last word. Over to Simon Bird. people are very aware of just how difficult a class it can be of course it's a huge spectrum there are areas that are really tough working bodily injury exposure so you look at lower down gl layers trucking and stuff like that really tough classes but then there are other areas where there's still good underwriting discipline line size compression has steadily been applied people aren't broadening their shoulders unduly if you like you're not suddenly seeing these huge 25 million dollar primaries you still need layers and co-insurers to make things work and that still keeps good discipline there are far more underwriters on the slip which brings with it far more observational discipline and so forth but you've really got to watch it in certain areas certain states obviously legal jurisdictions are so tough it's not just u.s business but it's certain classes of USGL in certain regions of the states are really hard.

40:21Wise words as ever from Simon. So let's recap the rating environment. Adequate-ish on average, but fragile in places with casualty still the great unresolved argument. There's also plenty of risk that, even after the Great Reset, nobody's confidence has been fully priced in. Rate is one thing. Now it's time to look at structures and how they're likely to hold up at 1.1. Rate is only ever one lever. Move the attachment point down, increase the limit, or quietly reinstate a coverage that was excluded last year, all for the same premium, and the accounts might say nothing happened, but something definitely has.

40:57Given a more cooperative market, Alessa Quain at Sompo told me what's probably at the top of most buyers' wish lists this year. I have a pretty varied book of business because it's global in nature, And so the product and the design of the limits and the geographic spread of it, and also from like a peril perspective on the property side, program that maybe has a bit more flexibility in its attachment or at an aggregate level. A lot of people packed away from doing ag covers when the market was hard, etc. So something like that that could potentially assist us from a property perspective for a more global book would be something I would be looking for.

41:36So the seed and demand never went away. It's the supply that retreated. Now that supply and confidence is back, and we have a better handle on Sedan's insurance books, many of which have been substantially re-underwritten in the past four years, there's business to be done for those reinsurers that really do want to try to give Sedan's more of what they want. Alex Kazanjian at reinsurance broker Augment Risk has already helped bring some more flexible structures back into existence. You're looking at your clients, and your clients always want to save money. You're looking at your clients and they always want to grow.

42:08And you need to ensure that your solutions are aligned to their long-term incentives that they have or their long-term capital objectives. The reinsurers like to have some predictability in their cash flows. So even if the market's softening a tiny bit, actually what they did was they wanted to become more relevant to their clients. So we actually saw the first structured whole account XOL. And that's something that we haven't seen for a very long time. and they wanted to do that because they realized if they're getting 10 % rate reduction on their underlying whole account, it means that they need to fill that premium from somewhere.

42:41If they need to fill it, either they're going to increase some sort of attachment point or they're going to sell a new solution. The new solution they came up with was a structured aggregate XOL. That was a very cool and very innovative thing. So after a four-year absence, cool and innovative things are back. Scott Egan expects attachment points to be a live debate at 1.1. And he noted that the market has the receipts close to hand this time. I definitely think attachment points will come under debate as we go into the 1.1s, etc. But the great news is you don't have to go back too far to look at lots of frequency events where you can see where they attach.

43:17So I think data is your friend. Let's not get carried away in a few good quarters. I'm afraid we don't price risk on that basis. And I think that was the correction In 23, there was two big things happened. One, the level of attachment point, and the other were the rates, and both happened. And I think the rates are softening. I see less, I see less, not completely zero, but I see less softening in what I would call some of the structural aspects. A good point from Scott. If frequency is traded a bit more, everyone will be doing so with their eyes wide open. Reinsurers should know exactly what they're giving away and what it's likely to cost them.

43:54So, rate has room left to give, and so, quietly, destructure, which raises the single most practical question of the week. If you're a buyer sitting across the table from all of this new opportunity, what should you do about it? Lara Mowry at Gallaghery says the healthy market in and of itself is the opportunity, not just the reduced price. I'm sure everybody's been having a lot of the same conversations this week around the fact that we don't have any shortage of being able to place business for clients through 2026 or as we look ahead into 2027, that's our expectation. It really lays the groundwork and the foundation for having much more interesting conversations rather than just, oh, am I going to get X percent off in price on my program?

44:46and being solely focused on something like that, it allows for much more creativity for buyers to be able to take a look at what their internal goals are and to say, is the reinsurance program or even just the way that they're managing their capital actually meeting needs as their own business evolves and their own view of the market evolves and take a step back, look at it a little bit fresh be able to have conversations with their reinsurance broker, with their key reinsurer partners, and say, there's a few things that aren't quite meeting my needs. Can we have a conversation about how to get that done?

45:29And this is the perfect point in the market to really be able to do that. So in a market where you can probably get what you want, now is a really good time to look at everything from the ground up and do a fundamental assessment of what kind of reinsurance support you really need going forward. Richard Dudley, Group Chief Broking Officer at BMS, is telling his clients much the same thing. From our perspective, it's actually whether they should think differently about the shape of those protections, whether they buy them in a different way, whether they buy multi-class protections in a way they might not have done before, something that matches their strategy they have themselves, because they're obviously managing a market condition as well, and in many insurance markets we're seeing similar conditions.

46:13So they have to think about their strategy for the next two or three years. And we want them to buy reinsurance, which helps sustain that strategy. And that might not be the same shape it is today. And we think that is an opportunity in today's market. We heard whole account earlier, and now we've just heard multi-risk, words that have been largely absent for the last four renewals. Neville Ching, a director at Willis Rhee in Bermuda, puts the upgrade argument even more plainly. You are going to get more for your money because there's more capacity around and you know more about your risk. So there's going to be efficiencies and you can be a lot cleverer than you used to be.

46:48So I think we need to be advising our clients of everything that's involved in their portfolio, anything that can bring about a surprise or a shock in the future and give them the right reinsurance protection to better wrap around that and give them comfort that when it comes and it will, they've got enough protection to better trade forward and keep their shareholders and analysts happy. So there's a chance to be a smarter and better protected buyer. Simon Headley, CEO of Acroshaw Re, agrees that the windows of opportunity are wide open. The only question is whether buyers will use the opening wisely.

47:22The windows for reinsurance are generally wide open on most things, including structures and covers, multi-year aggregates, so on and so forth, that weren't necessarily available a couple of years ago or so. Reinsurers, capital providers, have the ability and willingness to deploy some more capital, take on some more risk. Let's spend some time thinking about the seed and subjectives and how doing something around this sort of time could help where you want to be in three to five years. Multi-year is another reinsurance term we haven't heard since 2022. Simon couldn't have made it any clearer.

48:051-1-27 presents a clear strategic reinsurance buying opportunity. James Slaughter earned a reputation as a tough and canny buyer of reinsurance. Let's hear him run us through his thinking as he looks to renew his own protections. I do prefer, and it's a personal preference, but I think it pays out in the long run. I would prefer to have a long-standing, consistent and transparent relationship with my reinsurance panel where we're very open our dialogues meaningful at all times and when a claim comes up there's no concerns you just sit down we have that conversation and equally when we're having conversations about pricing I'm probably not squeezing the last pip and I'm recognizing that that's partly the relationship that I'm building and I tend in my experience this is year 30 so I'm feeling a bit gray around the edges in my experience that has served me better in my career than to be a little bit more aggressive and opportunistic and buy to suit the price.

49:04So I'm tending to buy for strategy, not for price. Nice to hear that service and two-way trust are still highly valued currencies, and that you can upgrade to a better quality and ultimately more valuable reinsurance relationship if you think long term, with all agreeing that now is a really good time to clear the decks and start afresh. Alex Kazanjian of Augment Risk makes a good point about operational efficiency. We had a client where they had 118 separate reinsurance treaties across their portfolio. If they were able to consolidate those into three, that is so much operational efficiency that they can drive that for them, it didn't matter the price as much.

49:44For them, they were getting killed on this operational element. And so because we made their business so much more efficient, they could focus on growth. Now, growth can translate into higher profitability, not just from the perspective of profitability, i.e. the margin they're getting from the reinsurer, it's actually the operational savings that they are able to translate into higher margins for them over the long term. There are clearly many different ways of adding value, and a complete global restructure could be one of them. We all know that reinsurance is a form of capital, and it's a form of capital that's getting cheaper, while the alternatives are getting more expensive.

50:19So does it follow that increasing reinsurance orders at this time of the market is a wholly sensible and economically rational thing to do. Here's the thinking from Alessa Quain. Everybody has a variety of goals that they have to meet, right? Some are top line, some are net line, some are ROE, some is bottom line dollars. And so I think what you want to be able to do is to structure your, I would call it your capital structure of which reinsurance is a part of that in such a way that allows you to really continue against your strategic objectives regardless of kind of where the cycle is. And so I think you'll always have a mixture in the way in which you utilize traditional reinsurance or alternative capital or whatever the case is.

51:06I agree with you from a just pure ROE perspective, you should buy more, right? But once again, I think it's a longer term view. And sometimes if you think about it, you could buy more, your net is lower, then do you create an expense ratio issue for yourself in the very short term, and what you don't want to do. And so you're really balancing a lot of different things as you think that through. If you do it to the extreme, you force it to be pro-cyclical, if you will, right? And so I think it's a balance. And I think it's something that sedans are always looking for that right balance. And it depends on the sedan and what their capital structure looks like and their balance sheet.

51:44So there's a lot more to it than just buying more insurance just because it's relatively cheap. your own expense ratio for one, and in extremis a dangerous reliance on cheap reinsurance that can catch you out if the market turns unexpectedly. Neville Ching of Willis Rea has the best summary of why none of this should be pushed too far. Just because it can be done doesn't mean that it should. I could think of one or two examples, no names mentioned in the market, where they've judged every relationship, every key relationship. At times they have pushed to go through the floor, but most of the time they've paid up and seemingly they've paid enough so when the stress test has come the relationship is in place and you want really the morning after the event you want the phone to be answered and then the response to be positive and duncandale passed on some advice worth remembering at any point in the cycle discipline cuts both ways on both buyers and sellers of course there's more pressure in a longer term relationship there is bound to be at times.

52:47Ultimately, the long-term relationship comes from give and take on both sides. I remember very well a client telling us that Ian Sinclair had said to them, are you asking for this because you need it or asking for this because you want it? And they went away and they decided that they shouldn't ask for it because it was something that they wanted, not needed. Buyers have more leverage than they've had in years, but at the moment, most people think they're using it responsibly. So let's flip the question around. With clients having this much choice, how does a reinsurer make itself more likely to be the one buyers choose?

53:23For Jill Beggs, it's all about problem solving at a local client-specific level and giving underwriters the authority and trust to give good service. The conversation goes beyond pricing. We've found opportunities to bring solutions to our clients that go beyond price, whether it's parametric solutions, renewable energy, putting different lines of business together in a way that it's not as easy for some competitors to do that because of the way that they're structured. We're a very lean team. We're locally empowered. Our experts work across the globe together to come up with solutions. And those solutions are evolving as risks evolve.

53:57It's a more challenging environment, more challenging probably than we've seen historically, and that requires different types of solutions. So the conversation goes way beyond price in terms and conditions from our perspective. So quality of service is definitely coming to the fore. And incidentally, that's another mention of a multi-line approach. Jörg Brunetsky at MSRE says the answer to being chosen is to be choosy yourself. If you look at the entirety of a business that you have with one client, so we are a client, a selective reinsurer. This means like we select the client and then we build broad-based relationships with you.

54:31Negotiations get better the more room you have to negotiate. So if I have a lot of table stakes to play with on both sides, I know why you buy what you're buying, what it does to you. We are more likely to find a compromise. Will I have to give on parts? Yeah, of course I will have to give. And does everything need to make sense in one year if you really trade with a long-term commitment to each other? I don't have to optimize everything for the last 5%. But what does that selectivity look like from the buyer's side of the table? Alessa Quain at Sompo told me exactly what she looks for when she's opening a new relationship with a reinsurer.

55:08If it's a new relationship, I want to make sure that it's someone who isn't just sort of dipping in and out. So I would want to look and see what's been the consistency of their appetite generally in the market overall. Secondly, I would want to make sure, especially if they're a new partner, the quality and speed of people of their execution, their ability to actually get all the paperwork done, get everything out there, etc. And then over time, I would want them to understand and buy into the desire to support what it is we're trying to achieve. So consistency, service and real buy-in are what really matter.

55:45That's probably enough of the back and forth between students, their brokers and reinsurers. Let's hear what investors are thinking. Kate Tong and Robert Flack of Argenta Private Capital bring capital to Lloyd syndicates. They're seeing a different kind of investor turn up this year. The new investors coming in are a little bit more measured this year. So last year we saw large alternative asset providers trying to get in, trying to write kind of 100 million, 200 million a premium, whereas this year it's a little bit more measured long-term mutual insurers that are in it for the long run. And Robert Flack notes that investors are still seeing margin in what is currently going on the books.

56:23We're of the view, our investors are of the view, that there is still a margin in the reinsurance market. Yes, absolutely, rates are coming off, but the level of profitability that our clients have made out of the reinsurance market over the last several years is sufficient for them to believe that despite rates falling off, there's still that margin in there. So this is still one of those rare markets where buyers, sellers and investors are all relatively happy. So let's move on and look at the capital question. Whichever way you measure it, capital is at record levels. Given a softening market, what should reinsurers be doing with any excess capital?

56:55Capital can be either deployed in underwriting, given back to shareholders in dividend or share buybacks, or used to buy out others. Over to David Flandreau for a scene setter. Reinsurers are still deploying capital into the market, but they are buying back shares. And then they are also very acquisitive. The M &A cycle, in my experience, tends to correlate with three things. The first thing is elevated ROEs. The second thing is elevated valuations. And the third thing is falling pricing. We have all three now. And so there's a huge amount of M &A taking place, both high ticket, big ticket M &A, and then behind the scenes M &A.

57:29So this is a period where the sector will consolidate and capital will be put to work in all of those ways for sure. It's a very interesting time. So it's never one thing or another. It's a combination of all three. I then asked David what the most rational use of excess capital actually is at this point in the cycle. Now we're getting to the Nobel Prize winning Modigliani-Miller theorem. If you can't figure out what to do with your capital, then you should give it back to shareholders. But we're not to that point yet. Not even close. There's still plenty of the cycle left to run before we get there.

57:59That's not to say people aren't buying back shares, but they're putting capital to work. Jörg Brunetsky at MSRI thinks the cycle points to only one place from here. Look, I don't have a crystal ball. I do think when a market is headed from a cycle perspective, it all points to we are at the beginning of the cheating phase. So in the sense, the reserves are still good for most companies, you make good money, but the market is getting tougher. So at which point, when we see how the cycle develops afterwards, it's likely that M &A becomes much more active. And we've seen the first with Beasley Zurich, I expect it to happen.

58:37Can I tell you this is next year in two years time, or three years time, I don't know that, but I'm definitely expecting over the next three years M &A activity to pick up. So we don't know when, but the softer market should force consolidation. Not everyone feels under pressure though. Clemens Jungstuffel told me he often gets ribbed for it by his own bankers. I just quote what my investment bankers always say, Clemens, you're so boring. I mean, I can't do business with you on M &A. So why is that? Well, look, I wouldn't rule it out. But of course, we do benchmark any potential M &A and the valuations, etc.

59:11with what do we get for an acquisition? You know, do we get teams, knowledge, and the business itself? But then you have to look at it, you know, how large is that business, you know, once I've completed the transaction? And, you know, what's the cost of complexity that you also acquire versus organic scenarios? And therefore, I think the organic growth has served us on the PNC Re side quite well. As long as we can grow organically, which I'm very optimistic about, there is no need for us. and actually no value in us to do M &A. So as long as organic growth is there, M &A is still off the table for many.

59:50Ed Hochberg at Marshree has a more entertaining way of tracking the same question. We have an annual dinner Wednesday night where we try and predict what's going to be the next M &A, and I did win it one year. Otherwise, I've been very poor at predicting what that's going to be, but I would expect that we'll see some consolidation. We may see some companies from the Far East being acquisitive. We could see some mergers of companies, the large sort of acquiring, the not quite as large. But I think we could see one or two really transformational type transactions coming up. Yeah, I would not be a bit surprised.

1:00:24Good luck to Ed for his annual prediction. But it sounds like we shouldn't be surprised by anything on this front. Duncan Dale says the Lloyds model gives him a structural head start on the capital question. Everyone's got their own models around capital. What we can do within a Bloyds environment is work in a very capital efficient manner. And so because of the Bloyds licenses and ratings, we don't have to hold excess capital. And so we can be very efficient with it and give it back to our capital providers. So it's an advantage of that model. The annual joint venture still winning praise over 300 years on.

1:01:00For those not buying, the alternative is simpler. Scott Egan at Serious Point and Paul Brand at Convex both pointed to the same solution. I think everyone has got lots of opportunities to deploy their capital. Obviously, I would say priority one for most people is always organically, how do we deploy that capital? And I think that's why you're seeing some of the rate pressure as people look to use that to grow. Obviously, you can grow inorganically. And I think we saw a flurry of that in late 2025, dried up a little bit at the beginning of 2026. But look, I think there is capital there to deploy inorganically from balance sheets.

1:01:31I'm sure. And then obviously, there is the opportunity to return it to shareholders as well. And in truth, I think most people will deploy a mixture of all three. So I think if you do get to a position where you have excess capital, the best thing to do with it is to give it back to shareholders. I wouldn't be at all surprised to see more consolidation amongst the carriers. Could a Nobel Prize be on its way to Paul? One of the great things about Monte Carlo is that it isn't only about headlines and rate movements. Some of the most interesting conversations and meetings of the week came off diary, in bars and in brief encounters in lobbies scurrying between meetings.

1:02:11Many things that happened later this year and next happened because of conversations that began down here. By the way, it's worth making an observation about the environment in Monaco this year. The extreme heat and humidity was the hardest to cope with of any rendezvous I've attended in the last 20 years. Maybe that added to the candour and a sense of urgency of some of the attendees. Some of my interviews dealt with the state of the market and what to do in it so quickly that we were able to spend the rest of our allotted time talking about other things entirely. For example, Richard Brindle, CEO of the Fidelis Partnership, was characteristically short and to the point.

1:02:45He let me in on his colleague Richard Coulson's three-word strategy for this renewal season. I think Rich put it very well last week. He said, for this reinsurance season, we're going to go early, we're going to go big, and we're going to go cross-class. and that's exactly how we're going to operate. If only every encounter could be so straightforward. That speed and efficiency left us with lots of time to record a whole new podcast of material. Meanwhile, Martin Burke at MS Amlin had spent his summer at the cinema and this year's blockbuster gave him what might be the analogy of the year for the predicament of underwriters at this stage of the cycle.

1:03:18I'm a bit of a history and mythology geek and I really enjoyed the Odyssey in the summer when I went to see it and actually the one scene that really struck with me was a scene where Odysseus is strapped to the mast of his boat and they're sort of rowing by the sirens. So I think where the market is, is that you have got maybe some people in the market who are one or two of Odysseus' crew who take the wax out of their ears and they jump overboard and they're going to the sirens. You've got some parts of the market that are sort of grimly rowing on under a broader direction of an Odysseus type character who could be sort of multiple people in the market.

1:03:54But I suppose most of the market is Odysseus, in fact. So they're trying to listen to that siren song and say, actually, we are focused on that longer term aim. You know, I've been trying to get home for all these years. A bit like a market cycle. Eight to ten years trying to get home. It's a bit like trying to get through a market cycle. I actually think the market is in that delicate balance point of there are temptations out there. There are the siren songs you can go towards. And that might cause you a lot of damage or some sort of irreparable harm. But actually, what you need to do is you need to listen to that, but keep focused on what is my long-term aim.

1:04:26I'm trying to get home. I'm trying to get back to the clients that I know have always stood by me. Simon Bird at Britt takes a less poetic and rather more blunt view of a lot of the capital chasing the market down. We could increase the capacity easily, there are people queuing up, but we can't honestly deploy it. So we're not going to take money and just take the overrider. We're culturally underwriters and we're an honest business because Britain's 50 % invested in it anyway. But it's the backward-looking nature of so much money that seems to come into this market that I think is verging on tragic, if you like.

1:05:04We look at three to four positive closed years and everyone thinks it's a gravy train. And they are perfectly mismatching the cycle. So let's hope it's not a Greek tragedy for the market. Neville Ching of Willis Rea offered the single most disarming answer of the week. That's generally your advice as an experienced reinsurance broker to say, you can push, but don't push too far because it's actually not in your own interest. Mark, I'm a lover, not a fighter. I like everyone to get on, you know that. And it's the same. I think back in most areas of life, it pays to be nice. And it's just time for one final piece of colour, courtesy of Paul Brand at Convex, on why deploying capital purely because you happen to have it is generally a bad idea.

1:05:47Do you think, on the whole, it's easier to innovate when there is more capital? No, no. I'm not certain how easy it is to innovate. So that would be my first point. That's because of the what you know and what don't you know and the uncertainty versus certainty balance. I think you should be approaching your innovation based upon your desire to build a product for clients as opposed to oh god I've got a bit of cash lying around on my balance sheet let's go and spend it over here I was reminded of the KLF song I don't know if you've ever heard it build a fire where they yes yes yes they essentially run off into the countryside with a million dollars and go and burn it I mean that's quite innovative as a way of deploying capital but probably to be avoided I think it was intended as a work of art absolutely and I think it probably was.

1:06:39None of us necessarily want to see an insurance company in the National Gallery as a work of art, self-immolated. No, no self-immolation at Convex. Yes, a return of excess cash in the form of smouldering ash is unlikely to go down well with investors. To sign off, I asked everyone what headline they'd like to wake up to on the first working day of January 2027. Here's Les Aquain of Sompo. Market had ample capacity, is prepared for the future and is driving towards supporting the new risks that the clients are out there facing and trying to manage themselves and is partnering on designing what that needs to look like from an appetite perspective.

1:07:21And here are Jill Beggs, Scott Egan, Renogi Day, and Martin Burke in quick succession. I would love to read about rate adequacy and discipline and consistency and normalization, I would say. Sensibility prevails. And what would that mean? That means we don't take the rates and the structures back to the pre-23 days. And so for me, I think a bit of competition, a bit of pressure is absolutely fine. No issue with that. I think it's good for the industry, keep it sharp, good for customers as well. But ultimately, we retain what I would call sensible structures that mean we're there for our customers today, tomorrow and the day after.

1:08:01Further vindication of the trust that our clients place in us, the best outcome for me would be that clients are happy again and thank us because it's a testimony to the quality of the work we do. I would like to see that there has been consistency of approach applied by the market. So we want to make sure our clients see us as being consistent, both consistent through time with them, but also that they can see that our approach across clients is consistent so that they're being treated fairly. I also think I would want to see a good strong element of continuity both in the portfolio that we write and we also want our clients to experience that sense of continuity.

1:08:42And here's the penultimate word from Simon Headley of Acroshore Re. It's a good market, I think, for meeting clients' needs. And that is really what we're all about. So if we can meet those needs and the market's accommodating, I think that's a good place to be at this point. I said penultimate for Simon's comments because if there's a set of thoughts worth leaving with you above all the others, they belong to Andreas Berger, CEO of Swiss Re. I didn't have a one-to-one with Andreas, but he was asked a question by my former colleague Catherine Shee at the excellent Insider 30th Anniversary event in the Hermitage Hotel.

1:09:17His answer sums up everything you've just heard, and everything reinsurers now need to go away and work out for themselves. In the interview that we're going to see further rate reductions, why the AT &T is at this next renewal, how sustainable is that for reinsurers? So, you asked me, OK, how do you feel and how's it going? Let me say it's the same old, same old. So it's nothing new. We've been there before and every year I come to Monte Carlo, there's two worlds. One is the world of stakeholders that need to work and play with information. And that's okay. So people start to fish and to interpret.

1:10:05And then we will talk about it, write about it, and that's all good. some ideas are very wild and then there's like emotions going on and panic etc. They're all copy pasting that almost and then there's a second world so we sit down in our conference rooms and we have proper conversations. No panic, markets are a lot nervous. They, I think, expect a realistic runoff events for the millennials. You said it here. Nobody's expecting to have any disruption because nobody wants it. What we have to find out is where is the predicting point, where suddenly markets go too far. and I just coach the industry, look, everybody needs to do their homework.

1:11:03You've got to know how far you can go. Sorry about the sound quality there, but I really thought it was worth keeping in. So there it is, a market that most people call softening, some call normalising, and everyone agrees is still making money. Reinsurers know that at 1.1.27, they will have to give something to get something, whether that's a point of rate, a newly bundled multi-year structure, or simply more of their own time, attention and service. Buyers, for their part, seem less interested in banking every last cent of savings than in finally building the reinsurance programme they've always wanted, one with more flexibility, more cross-class support and a shorter list of things to worry about.

1:11:42Whether that trade proves sustainable will depend on the thing this industry always depends on, whether the humans in the room follow the data or whether, as Alex Maloney warned us, They simply forget the lessons of the last cycle before the next one arrives. Thanks to all my interviewees this year across Monte Carlo for their time and candour. I'm sorry I couldn't use more of all of their interviews, but that would defeat the object of this documentary-style podcast. Thanks also to the RVS team for hosting a really well-organised event. We never thank them, in fact often the reverse, and we really should.

1:12:15Thank you so much also to Stevens Rickard for their continued support. A production like this wouldn't be possible without them. So, as this market decides just how far it wants to soften, I wish you a sensible renewal rather than a reckless one. Let's speak again in 2027. Well, I hope you enjoyed today's episode. If you did, don't forget to subscribe or leave a like or a review or recommendation on whatever podcast platform you used to access this programme. These really help get the word out. Before we go, just a quick reminder that advertising slots are available here and in other places in the Voice of Insurance podcasts.

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1:13:24Voice of Insurance is produced by me, Mark Gagan. Music was written by Anna Gagan and produced by Carlos Gagan. Check out more podcasts and written comment pieces at www.thevoiceofinsurance.com.