Balanced reinsurance environment to persist into 2026: Active Re

The reinsurance market is expected to remain “in a phase of transition and recalibration”, remaining fundamentally healthy heading into 2026, said Robert Ali, Active Re’s Chief Operating Officer, in a recent interview with Reinsurance News.

After a period of hardening, the market has evolved into a more balanced environment in 2025, a trend that is anticipated to continue, Ali highlighted.

“Strong capitalisation, disciplined underwriting, and continued inflows from alternative capital are sustaining market stability,” he explained.

Despite significant losses in the first half of the year, notably from the California wildfires, Ali emphasised that resilience has been demonstrated through double-digit returns on equity and sustained investor confidence in insurance-linked securities (ILS) and catastrophe bonds.

According to Ali, the balance observed in 2025 will carry on through 2026. “While certain lines may experience gradual softening, the overall market will remain selective,” he said.

“Segments impacted by losses will still require technical pricing, whereas portfolios with strong performance may see modest easing. The fundamentals of capital discipline and risk adjusted returns remain intact, pointing to a sustainable environment,” Ali continued.

Discipline, a key factor in the market’s recent success, is something Ali also expects to hold through 2026.

“The lessons of recent years have reinforced underwriting discipline across the industry, and we believe it will hold. At Active Re, discipline is embedded in governance, pricing, and capital management frameworks. MGAs — while posing regulatory and compliance challenges — remain an efficient mechanism to extend our reach into new markets and lines of business. Their value lies in speed and expertise, but success requires rigorous oversight, robust risk controls, and alignment with technical standards,” said the COO.

Active Re reports in its 2024 Annual Report that it operates with seven MGAs spanning Latin America, North America, EMEA and APAC, which together manage approximately 46% of its USD 223.8 million gross written premium through delegated authority programs.

Discussing the evolution of reinsurance pricing at the 1/1 2026 renewals, Ali commented that property catastrophe rates are predicted to remain firm given ongoing climate volatility and elevated retrocession costs.

“In property ex-cat and casualty, moderate easing could emerge in well-performing portfolios, though always within analytical and disciplined parameters. Across all lines, negotiations will remain focused on maintaining sustainable, risk-adjusted margins,” he added.

Reinsurers are expected to once again exceed their cost of capital in 2025, but with the market softening from the highs of 2023, we asked Ali what players need to do to continue to meet their cost of capital.

“Reinsurers must continue delivering technical excellence, optimising expenses through lean operations and digitalisation, and employing capital solutions such as retrocession and structured partnerships. Active Re leverages an integrated model – treaty, facultative, and MGA channels — underpinned by rigorous ERM. This helps protect margins and deliver value to both shareholders and cedants,” he said.

Part of the so-called market reset in 2023 saw reinsurers move away from frequency risks as increasing losses from secondary perils consistently drove elevated losses. The frequency and severity of events such as floods, wildfires, and severe convective storms continue to rise, so we asked Ali how his firm is addressing these perils.

“We address secondary perils through enhanced modelling, detailed exposure analytics, and close collaboration with cedants. Our pricing incorporates explicit peril assessments, ensuring terms reflect the underlying risk profile. Diversification across geographies and lines of business mitigates concentration, while we actively promote prevention and resilience initiatives with our clients,” said Ali.

Looking ahead, the long-term sustainability of the market depends on “continuous innovation, disciplined capital deployment, and robust enterprise risk management”, Ali stated.

“To withstand systemic challenges — from climate and cyber to geopolitical instability — the industry must attract alternative capacity and embed ESG principles into strategy. Active Re’s six pillars — sustained growth and diversification, investment and global market outlook, innovation and digital transformation, operational performance optimisation, business development and GRC culture, and talent structure and management — support our forward-looking approach, ensuring resilience for clients and long-term value for stakeholders.” he added.

Active Re sees significant growth opportunities in developing markets, as well as in trade credit, surety, and specialty segments through MGA partnerships, which enable the carrier to “extend into niches and regions where agility and expertise are crucial, while maintaining rigorous oversight.”

“Technology adoption, ESG alignment, and disciplined underwriting will continue to underpin this expansion,” he highlighted.

The company’s recent A (Excellent) AM Best rating reaffirmation supports its strategy of global expansion into new markets and lines of business.

“The AM Best reaffirmation validates Active Re’s ability to sustain profitable growth while diversifying globally. It provides confidence to our cedants, brokers, and partners that we can continue expanding into new markets, lines of business, and MGA partnerships under strong governance — reinforcing our commitment to long-term value creation,” concluded Ali.