The reinsurance industry’s annual Rendez-Vous de Septembre (RVS) in Monte Carlo was busier than ever this year with a broader range of participants than usual—including, for example, more private capital firms and asset managers. We had an opportunity to speak with a wide range of participants, including reinsurers, primary carriers, brokers, alternative capital providers, and others. While the weather was sunny at the conference, we were struck by an overall cautious mood, as the industry braces for a softening cycle after a few years of solid financial performance. Whereas participants at RVS in 2025 were positive, we sensed a change this year, with growing expectations that more delicate conversations are likely ahead.
Three other topics were never far from the conversations in Monte Carlo. First is the highly unsettled global context and how it will play out for the industry. That includes not only geopolitical conflicts and related supply chain risks and energy price shocks, but also the increasingly tangible impact of climate change. Second, inevitably, is the impact of AI on the industry. And third is the role of innovation and alternative capital in the industry. While these present a host of new opportunities as well as competitive challenges, we also heard some questions about how emerging tech-driven business models will fare during the down cycle.
Here are our takeaways:
The mood is cautious
The cyclical market was already showing first signs of softening at Monte Carlo a year ago, following several years of rate increases that allowed reinsurers to restore their returns on capital. Back then, as we noted, the industry seemed to be gliding into the downturn, and the mood was generally positive. This year, we picked up a heightened sense of caution. Indeed, the talk has shifted from a monolithic industry cycle to more granular multi-cycles. The common refrain from industry leaders is one of prudence. They are insisting that they won’t chase growth and will exercise rigorous discipline in underwriting. The subtext we also heard: “We don’t want to disappoint our partners, but we’ll make sure to maintain discipline.” There are, of course, nuances, and rate and conditions will vary depending on the line of business, the geography, and the quality of the books. At the same time, reinsurers face pressure from shareholders to deploy the excess capital accumulated during the recent hard market profitably and to avoid losing market share.
The world is getting riskier
Reinsurance lives on risk and volatility, so a riskier world is in some ways a good thing for the industry. Even so, the global context is now highly unsettled and marked by multidimensional risks that include wars and geopolitical tensions, unstable energy prices, supply chain disruptions, and the impact of climate change. That level of uncertainty is new, and reinsurers are navigating it.
From a short-term perspective, the consequences of climate change are proving something of an anomaly for the industry. The summer has been brutally hot in Europe and parts of the United States, with significant losses from fires. Yet over the past one to two years, insured losses from catastrophes have actually declined. That, in part, is because there have been fewer highly destructive hurricanes. Whether that’s a blip or a longer-term trend remains to be seen.
For reinsurers, AI comes in three flavors
AI inevitably was a theme in Monte Carlo this year, just as it has been in the past two years. For reinsurers, this theme seems to come in three flavors.
First is how reinsurers can use AI for their own operations to scale up and create the efficiencies that the technology promises. Here, the discussion is evolving and maturing. Reinsurers have moved from concepts and thoughts to replacing workflows and ways of measuring impact. Yet all this is still in its infancy and no doubt will be a big theme in future Monte Carlo gatherings.
The second flavor is AI as a means of innovation. There has long been talk about how analytics, agentic AI, and machine learning provide new opportunities. From both sides of the market, we heard thoughts that reinsurers may (partially) be bypassed while the role of brokers as intermediaries could also evolve under pressure. As we discuss next, we heard a lively debate in Monte Carlo as to what the impact of the cyclical downturn could be on all of this.
The third flavor is AI as a business opportunity. Companies are likely to need AI liability insurance to guard against AI agents going rogue and wreaking havoc. AI also brings other new risks that need insuring, from cybersecurity to coverage for the data centers that are now attracting high levels of capital expenditure. The current debate is whether this would require a separate cover or could be included in existing covers, and whether it can be treated as an individual line of cover at all if AI becomes pervasive across the business.
What will happen to alternative capital in the down cycle?
We have seen a wave of incumbents entering into innovative sidecar arrangements with institutional investors that allow them to share in the risks and rewards of their underwriting. “Alternative” reinsurance capital, while still relatively small, has been growing at an annual average rate of about 12 percent, according to Fitch data, compared with 3 percent for the industry overall.
The question we heard being discussed in Monte Carlo is what the softer cycle will do to capital innovation and disintermediation. On the one side are those who argue that they are inevitable as technologies broadly march onward and institutional investment continues to flow. But we also heard voices arguing that during a downturn, traditional underwriting has the edge, since the key is to be selective in judging risks and experience is indispensable for doing so. The jury is still out.
All in all, after a few thought-provoking and fruitful days in Monte Carlo, we left feeling comforted by the vibrancy of the industry and excited about what comes next. Of course, eyes will be on the level of insured catastrophic losses this year. But equally, many are looking to see how many of the innovative business models that have sprung up in recent years will survive the changing market conditions and softer cycle.
Antonio Grimaldi is a partner in McKinsey’s London office, and Sylvain Johansson is a senior partner in the Geneva office.
Our mini podcast series ‘Live take from Monte Carlo RVS’, featuring short interviews with leading reinsurance and insurance executives, including:
- Interview with Nick Hankin, Managing Director at QBE Re.
- Interview with Karl Hennessy, Group President and US CEO at McGill and Partners.
- Interview with Robert Wiest, Chief Executive Officer at MS Reinsurance.
- Interview with Holger Tewes-Kampelmann, CEO of Allianz Re.
- Interview with Urs Baertschi, CEO P&C Re at Swiss Re.
- Interview with Victor Kuk, Chief Executive Officer at Peak Re.
- Interview with Dr. Holger Nieswandt, Member of the Board of Management in charge of the reinsurance division at R+V Versicherungs AG (R+V Re).
- Interview with Bob Forness, CEO of MultiStrat.
- Interview with Renaud Guidée, CEO Reinsurance at AXA XL Reinsurance.
- Interview with Albert Küller, CEO of Brace Underwriting.
- Interview with Molly Tully, Executive Managing Director on Aon’s Reinsurance team.
- Interview with Scott Egan, Chief Executive Officer at SiriusPoint.
- Interview with Tobias Sonndorfer, CFA, Chairman and Chief Executive Officer at VIG Re.
- Interview with Aki Hussain, Group CEO at Hiscox.
- Interview with Jean-Paul Conoscente, SCOR P&C Chief Executive Officer.
- Interview with Dan Draper, Group Chief Underwriting Officer and Head of AXIS Re at AXIS Capital.
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