Lara Mowery on 1.1: capital is plentiful, but the market still has a memory

The January renewals landed more favourably for buyers than many had expected, according to Lara Mowery, chief commercial officer at Gallagher Re.

Speaking to Mark Geoghegan on the Voice of Insurance podcast, Mowery described a renewal shaped by a familiar imbalance. Supply increased, demand did not keep pace, and pricing adjusted accordingly.

“Supply went up. Demand didn’t go up as much. Pricing came down,” she said.

That broad pattern held across most classes and regions, she added, with US casualty continuing to sit apart as its own, more unsettled discussion.

Capital wanted to move

One of the defining features of this renewal was the nature of the capital coming into the market.

This was not reactive money arriving after losses. It was retained earnings.

Strong profitability meant balance sheets were growing, and reinsurers were keen to put that capital back to work. By the time January arrived, there was a clear appetite to grow, alongside an understanding that doing so would require some pricing adjustment.

In parts of the market, particularly Europe, pricing moved further than many had expected. The scale of change felt compressed, with adjustments that might normally play out over several renewals arriving at once.

Mowery was careful not to frame the outcome as one-sided.

While buyers benefited from pricing relief, reinsurers were still able to retain business they viewed as attractive and to work more closely with cedants on programme design.

Structure holds, pricing moves

Unlike the major reset of 2023, this renewal was not defined by structural change.

Attachment points, which moved sharply higher three years ago, largely stayed where they were.

That reflects the work insurers have done since then, and in many cases the limited room they had to do anything else.

Portfolios have been reshaped, concentrations managed and primary pricing pushed through. Over time, insurers have also had to become more comfortable retaining risk they would previously have passed on.

“You can’t just snap your fingers and change a portfolio,” Mowery said.

A more grown-up discussion on aggregates

Where conversations did open up was around supplemental and frequency protection.

Mowery said reinsurers are more willing to engage on aggregate-type solutions than they were a few years ago, but not in the standardised way seen in the past.

Each discussion now depends on the individual buyer, the shape of the portfolio and the quality of the data available.

Aggregates, she said, still sit somewhere between judgement and modelling.

“There isn’t a button you press to get the answer,” she said.

ILS: from tension to integration

The role of insurance-linked securities also featured prominently in the discussion.

Mowery reflected on how far the relationship between traditional reinsurers and ILS capital has evolved compared with earlier cycles, when the divide between the two was far sharper.

Today, alternative capital is far more integrated into the market, with reinsurers increasingly comfortable accessing it through their own platforms.

ILS remains a competitive force, she noted, but also brings diversity of capital, flexibility of structure and speed of recapitalisation.

Its expansion beyond property, including into cyber and longer-tail risks, reflects that evolution.

US casualty: capital without agreement

US casualty remains the least resolved part of the picture.

Pricing at 1 January was broadly flat, reflecting continued uncertainty rather than a lack of capacity.

Mowery said opinions still differ on whether recent underwriting, pricing and claims actions have fully corrected the problem.

Settlement patterns are shifting, claims are accelerating and development assumptions continue to be tested.

Each quarter adds more data, but not yet clarity.

What has changed is the level of scrutiny.

Casualty buyers are now expected to demonstrate, in detail, how portfolios are being managed, not just in underwriting, but across claims handling, staffing and legal strategy.

Those able to do that are still finding capacity.

“There’s capital there,” Mowery said. “But people don’t all see the risk the same way.”

What happens next

Looking ahead to the rest of 2026, Mowery sees little reason for an abrupt change in direction.

Capital remains abundant and reinsurers continue to look for places to deploy it. Conversations around additional or supplemental cover are likely to continue as buyers decide how to use savings generated at 1 January.

At the same time, underwriting discipline remains firmly in place, shaped by the experience of recent unprofitable years.

With capital growing faster than demand, Mowery said it would not be surprising to see some reinsurers explore other ways to deploy balance sheets, including potential M&A, as the year unfolds.