The reinsurance industry’s annual “Rendez-Vous de Septembre” in Monte Carlo, a fixture on the calendar since 1957, is a great place to take the pulse of the industry—and after spending a few days talking with a wide range of participants, we can report the mood is relatively upbeat. The expected cyclical downturn has not been as abrupt as some feared, and while there have been some major losses this year—including from the Los Angeles wildfires in January—the full extent of insured losses (for now) still seems manageable this year. AI and its possibilities for reinsurance was very much a talking point, with many telling us about their use cases for it. And M&A is back on the agenda.
Here are the six main themes we observed at the event:
- A softening market, but no cause for panic
The reinsurance market is cyclical and after two to three years of “hardening,” with double-digit increases in rates that allowed reinsurers to restore their returns on capital, the long-anticipated softening is upon us. But so far, the industry seems to be gliding into this softening, with no panic or abrupt free fall at this stage. That is a cause of guarded relief in the industry, especially at a time of so much uncertainty about geopolitics, interest rates, and the overall state of the world. Buyers are, of course, happy there is price pressure, while sellers are happy the pressure is manageable. Still, the year has another three and half months to run, and the upcoming hurricane season will be crucial to defining the outlook into next year.
- No panic, either, about insured losses from natural catastrophes
January’s massive wildfires in the greater Los Angeles area at a terrible cost to lives and livelihoods were also a blow to the industry, with insured losses estimated at $50 billion to $80 billion. But since then, natural catastrophes have followed a more typical trajectory, leading many in the industry to anticipate total losses for the year of about $150 billion. That is in line with losses in recent years, and is starting to feel like a new normal. Again, hurricane season will be a determining factor.
- M&A is back on the agenda
M&A largely dropped off the reinsurance agenda in recent years, as part of a broader downturn in market activity, but in Monte Carlo, mergers were once again the talk of the town as organizations look to pursue the benefits of scale in reinsurance. Two deal announcements in the days leading up to the RVS event, including the $3.5 billion acquisition by Japan’s Sompo Holdings of the Bermuda-based Aspen Holdings Inc., and the $555 million acquisition by Skyward Specialty Insurance Group of the Lloyd’s specialist Apollo Group Holdings, have sparked renewed interest in M&A, particularly around unlocking innovation, growth, and alternative business models. Both of these deals are centered around reinsurance. In our conversations in Monte Carlo, we heard several carriers discuss what may be next on the M&A front.
- Competitive intensity in reinsurance brokerage is heating up
The world of reinsurance brokerage used to be all about just two or three large brokers, but the landscape has been changing as smaller brokers have consolidated to achieve scale. The top five now account for roughly 85 percent of total business placement. Though the league tables for the top five did not shift in the past year, the third-, fourth-, and fifth-place brokers on the most recent table are estimated to be growing at three to five times the rate of the top two. The net effect of greater competition is a new dynamic in the market that will keep leaders on their toes and be good for everyone.
- Alternative capital rides the cyclical reinsurance wave
In a reinsurance market with total capital of about $800 billion, alternative capital from firms outside the insurance sector has made some inroads in recent years, but its penetration has peaked at about 15 percent of the total. Initially, the arrival of these firms was a cause of concern for incumbents, but in the meantime, it’s clear they are here to stay and have become mainstream as part of the industry fabric. Many incumbents are now looking to diversify their earnings mix with fee income generated through third-party capital management. One outstanding question had been what would happen when the reinsurance cycle turned. The answer, now that it may be turning, is: nothing may actually change. Alternative capital (and industry participants) continue growing in line with the whole industry. They are accordingly no longer seen as a threat, but rather as a useful lever to provide complementary capacity.
- The last word goes to AI
It’s nigh on impossible to hold a conference in the financial services sector these days without AI hijacking the conversation. And reinsurance is no exception. In Monte Carlo, we heard a lot of talk about AI and how it could affect operating models, raising both efficiency and efficacity. The key breakthrough with generative AI and now, agentic AI, is that they can handle reams of unstructured data. That means taking on some of the painstaking information gathering and verification aspects of reinsurance. Indeed, AI agents can be trained to work up entire caseloads before they get to human eyes. The case for a step change in productivity is clear, and we heard about some significant experimentation that is happening, including specific use cases. Still, as with AI in many other sectors, there remain unresolved questions around acquiring the talent required for implementation, what happens to those whose jobs are likely to be affected, and the ability to drive real value to the bottom line. In many ways, it is still early days for AI.
We’ll be watching closely to see how the fourth quarter plays out to truly understand the outlook for 2026. Will the expected cyclical downturn remain muted? Will M&A pick up? And will reinsurance organizations find the promised gains from agentic AI?
Copyright © 2025 McKinsey & Company. All rights reserved.