Insurance: M&A and Reinsurance; Opportunities in a softer rate environment

Research evidence excerpt

Insurance: M&A and Reinsurance; Opportunities in a softer rate environment

Goldman Sachs Insurance

Reinsurance: Favourable rate reduction expected in June

n 1 Apr-26 Renewal backdrop: Risk-adjusted rates fell significantly across US and

Asia, returning to early 2020s levels.

n 1 Jul-26 in Australia is expected to be down between 10-15%; closer to 15%

overall: It is likely that this would still not be the bottom for reinsurance rates with

reinsurer ROEs still adequate and over-earning long term averages. This could also

be supported further if their perils losses are relatively benign.

n Rate reductions have been the same globally in markets: And have not reflected

the starting position of rate adequacy in each of the individual geographies i.e. Every

market seems to have a very similar rate reduction across Australia, Africa, and China

so rate adequacy today by market may look a little more chequered.

n Greater competition emerging from 2nd and 3rd Tier reinsurers.

n Reinsurance demand up ~10%, driven by retention buy-downs, frequency

protection, and higher limits/extended CAT (catastrophe) towers. However, with

very strong ROEs we think reinsurers are still generating capital in excess of organic

growth consumption.

n Global reinsurer capital up ~10% to US$785bn and third-party capital (CAT

bonds/insurance-linked securities) up 18%, driven by investor appetite and strong

reinsurer retained earnings (ROEs ~17%).

n Benign CAT losses reinforce favourable reinsurance trends; significantly higher

losses are needed to result in a material shift in pricing.

Exhibit 1: Natural Catastrope Reinsurance Pricing Cycle as portrayed by Hannover - remains favourable

Despite recent rate reduction, reinsurance rates remain very rate adequate.

Source: Company data

25 June 2026 2